Portugal today became the first state to approve the Fiscal Compact. 25 of the 27 EU Member states signed up to the tightened budget rules. The United Kingdom and the Czech Republic are the only two not to sign up. It is interesting that Portugal were first to approve the treaty as they were the third country to get a bailout of the EU/ECB/IMF after Ireland and Greece.
The Portuguese Government were supported by the opposition Socialists in passing the pact which was approved by 204 votes to 24, with two abstentions.
Portuguese Prime Minister Pedro Passos Coelho told parliament that the pact represented a “moment of confirmation of the European consensus”
Antonio José Seguro, the Socialist leader, said: “This treaty is vital to Portugal staying in the euro.”
Mr Seguro said: “This treaty may be a response to markets, but it is not a response to the crisis and to the problems of Portuguese, to unemployment. It is an unbalanced treaty.”
Mr Seguro raises some valid points as the Pact also does not deal with issues of Bank Debt but it is part of a number of initiatives to try and fix the Crisis in the Eurozone.
Ireland will be voting on the Fiscal Compact on May 31st. Ireland will be the only country to hold a referendum on the pact.
Nine Eurozone members want the Danish Presidency of the EU to speed up its work on a directive on a Financial Transaction Tax (FTT). While there is much opposition within the Eurozone and wider EU to such a tax, the nine countries intend to use the community method to allow them to use the EU institutions to set up and administer the tax and allow other countries to join while not holding them back.
The nine countries are:
The inclusion of Greece and Portugal is interesting as they are in receipt of an IMF/ECB/EU Bailout while Italy and Spain haver been teetering on the edge for some time.
There is opposition to an EU wide tax mainly from the UK and Sweden with Poland and Ireland also voicing unease about the plans, so do not expect these countries to join up any time soon.
The letter comes at a time during the French Presidential Election where Nicolas Sarkozy has placed a lot of faith in such a tax to win votes at home and is of course implementing the tax in France with or without the other eight countries.
Taxation remains an unanimous decision at the Council of Ministers under the Treaty of Lisbon, so even if one country opposes there will not be an EU wide tax on financial transactions.
Estonia is set to join the Eurozone on the 1st of January 2011 according to the Irish Times. Estonia was given the all clear by the European Commission. Estonia will be the fifth of the 2004 intake to join the common currency following Slovenia in 2007, Malta and Cyprus in 2008 and Slovakia in 2009.
Plans by Poland, Hungary and the Czech Republic are still not on track, so they will not be joining the currency any time soon.
It is interesting considering the current state of the eurozone that it is willing to continue to expand.
The Commission stated that “None of the other eight countries assessed in the report is found to meet all the convergence criteria for adopting the euro” Those countries are: Bulgaria, the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania and Sweden.
The Council of Ministers will have to approve this.