BRUSSELS, Dec 19 (Reuters) - European Union countries must better coordinate fiscal policies so that low-debt countries spend more to boost economic growth rates when high-debt countries save to shore up public finances, European Commissioner for Economic Affairs Paolo Gentiloni said.
Speaking at a European Central Bank conference in Frankfurt, Gentiloni said he supported the ECB’s view that the bank would achieve its inflation target much faster if it were helped by fiscal policies of euro zone governments.
He noted that EU budget rules, called the Stability and Growth Pact, gave the EU power to limit government deficits and debt levels, but pointed out that they did not allow to force countries to spend more.
“This limits our ability to achieve an appropriate fiscal stance for the euro area. It may not be a problem in a normal macroeconomic environment but, as I have said, the conditions that we are living through are not normal - though they may persist,” Gentiloni said.
“Since budgetary policies are the responsibility of Member States, the coordination of fiscal policy becomes essential. Fiscal responsibility in high-debt countries should go hand in hand with more supportive policy action in low-debt countries,” he said. (Reporting by Jan Strupczewski)