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5 Feb 2015
Europe: Plans for reform - RBS
FXStreet (Guatemala) - On Europe, analysts at RBS explained that the optimal end game for the reform agenda is a Structural Compact, with countries pooling sovereignty on the conduct of reforms to the centre and coordinating on implementation.
Key Quotes:
"In a Structural Compact each country would have to submit detailed plans for reforms of product and labour markets, which would be scrutinised, approved and then monitored by the Commission, with penalties for failure to submit or deliver on reforms."
"Aside from the clear economic benefits of rapid and coordinated progress on structural reforms to improve equity and efficiency at the national level and critically improve the functioning of the currency union there are also strong presentational argument for orchestrating the reform agenda in this way."
"First, rather than the ‘them versus us’ model of the Fiscal Compact with pressure being applied from the centre on fiscal laggards, all countries would be required to push through reforms, including for example Germany. This might make it easier to sell the reforms at the national levels where they are needed most."
"Second, one could argue that it may be easier to take on the vested interests that resist structural reforms (to protect rents) if countries pool their resources and make common cause with a coordinated push on reforms (in much the same way that politicians made the case for reform to the microprudential standards)."
Key Quotes:
"In a Structural Compact each country would have to submit detailed plans for reforms of product and labour markets, which would be scrutinised, approved and then monitored by the Commission, with penalties for failure to submit or deliver on reforms."
"Aside from the clear economic benefits of rapid and coordinated progress on structural reforms to improve equity and efficiency at the national level and critically improve the functioning of the currency union there are also strong presentational argument for orchestrating the reform agenda in this way."
"First, rather than the ‘them versus us’ model of the Fiscal Compact with pressure being applied from the centre on fiscal laggards, all countries would be required to push through reforms, including for example Germany. This might make it easier to sell the reforms at the national levels where they are needed most."
"Second, one could argue that it may be easier to take on the vested interests that resist structural reforms (to protect rents) if countries pool their resources and make common cause with a coordinated push on reforms (in much the same way that politicians made the case for reform to the microprudential standards)."