EC plans tighter monitoring after Greek crisis

Tighter monitoring measures of national economies in the eurozone are on the cards in the wake of the Greek crisis, the European Commission said today.

After an EU summit pledge yesterday to step in and help Greece over its public debt crisis “if needed”, EU Economic and Monetary Affairs Commissioner Olli Rehn welcomed what he called the “determined and co-ordinated” response from Europe’s leaders.

But the summit declaration did little immediately to boost the euro’s credibility rating on world markets, and the Commission hopes its latest moves to avoid a repeat of the Greek debt wobble will help.

“The critical lesson from this crisis is that we urgently need deeper and broader surveillance of economic policies, including earlier detection and tackling of imbalances, in order to better safeguard the macro-financial stability of the euro area,” said Mr Rehn.

“The Commission will soon come forward with proposals to further strengthen the co-ordination and the surveillance of national economic policies within the euro area.”

He said the 16 EU countries who have adopted the euro now had a shared responsibility for the currency’s stability, adding: “Our economic policies are a matter of common concern.”

Tougher economic surveillance to prevent a eurozone member getting into Greek-scale debt and deficit problems again will be discussed by EU finance ministers at talks next week.

Chancellor Alastair Darling is likely to attend the meeting but will take no part in “eurozone” discussions – standard practice for an EU country which does not use the single currency.

Yesterday, British Prime Minister Gordon Brown insisted at the summit that the question of helping Greece over its crisis was one for eurozone members alone.

Greece did not ask for a bail-out at yesterday’s summit, but the Greek prime minister agreed to reduce his nation’s budget deficit by 4% this year from its current 12.7% of GDP – which is more than four times the 3% maximum allowed under single currency rules. He has also pledged to get the figure down to 3% by 2012.

Regular monitoring by Brussels of Greek efforts has already been invoked by the Commission, and Mr Rehn said: “I call on the Greek government to do whatever is necessary, including adopting additional measures, to ensure that the ambitious targets set in the updated stability programme, in particular the 4% reduction of public finance deficit in 2010, are reached.”

He said the Commission would publish its first assessment of Greek efforts next month – and propose additional measures to Greece if necessary.