The European Union needs a pact on economic policy co-ordination alongside the Stability and Growth Pact, former European Commission chief Mr Jacques Delors said today.
Mr Delors, one of the euro's "founding fathers", said European Commission president Mr Romano Prodi was right to stir up a debate about the EU stability pact - Mr Prodi last week called the pact rigid and "stupid" - but that he was clumsy in his choice of words.
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"Europe is walking on one leg, the monetary leg. I proposed such a pact on economic policy co-ordination in 1997," Mr Delors said in an interview.
"Finance Ministers want to remain the masters of their own households and have resigned themselves to exchanging niceties. The result is that the real problems [at EU level] do not get tackled," he said.
The Stability and Growth Pact was agreed several years ahead of the introduction of the euro in 1999 and was designed to ensure that governments would keep national finances under control.
But with several countries pressing for a review of the stability pact as their deficits soar, the European Central Bank (ECB) issued a statement yesterday saying the pact was vital and that it was not inflexible.
The ECB accused "certain governments" of not respecting the pact, which sets an upper limit on deficits - 3 per cent of GDP - and urged governments to balance their budgets in the medium term.