BRIEF: EU Debt Plans Over-Optimistic On Growth-ECON Testimony
MNI (BRUSSELS) - Some European Union countries have based fiscal consolidation plans on overly-optimistic estimates of future potential growth, a fiscal expert told the European Parliament's ECON Committee on Wednesday.
"I wonder how the Commission will evaluate those. I personally would conclude that this fast growth is not justified by the plan so you need to go back to the lower growth assumptions and do the adjustment accordingly,” said Bruegel Senior Fellow Zsolt Darvas, referring to fiscal-structural plans submitted by EU states as required by new EU fiscal rules. (See INTERVIEW: Fiscal Contraction To Give ECB More Room To Cut)
"They just say - 'oh we will have an investment boom based on this reform or that reform and so growth will be faster,'" he said, without specifying which countries he was referring to.
The European Commission is due to give its assessments of the debt plans on Nov 26 together with annual fiscal policy recommendations to member states.