"There are countries for which fiscal consolidation is less useful than others.

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The European Union finance ministers will discuss next week whether governments with the strongest public finances can provide some budget stimulus to help support flagging economic growth in the 27-nation bloc. The discussions, set for a meeting Tuesday oct.4th in Luxembourg, could signal a relative reversal of a policy adopted by the same ministers in October 2009 that calls on all EU countries to start cutting their deficits in 2011. With post-crisis economic growth much slower than expected, the EU is under pressure from the International Monetary Fund and the U.S. to consider more stimulus programs . The EU's executive arm the commission, sought to debate the idea at the meeting, EU sources said. The idea is that countries not violating the EU's deficit limit of 3% of gross domestic product could allow their "automatic stabilizers"government spending programs such as unemployment benefits that tend to rise during a slowdownto operate without further restrictions. That means governments with the strongest financesGermany, the Netherlands, Sweden, Finland and Luxembourgcould run smaller surpluses or bigger deficits than expected, some diplomatic sources said. "There are countries for which fiscal consolidation is less useful than others." But some countries, such as Italy, worry the debate could lead financial markets to doubt the commitment of the bloc's weaker nations to cut their deficits, said another Bruxelles source familiar with the debate.

The policy change, if adopted by the stronger countries, isn't likely to provide much stimulus to the economy, given that the vast majority of EU governments are cutting their deficits this year and will continue to do so through 2012. Euro-zone ministers meeting the day before will examine the measures proposed by Greece to put its economic adjustment program back on track. The euro zone and the IMF are largely satisfied with the new fiscal measures the government has proposed, including a real-estate tax and more public-sector layoffs, but they are seeking more proposals to open up Greece's closed service sector, a euro-zone official said. An agreement to provide collateral for Greece's euro-zone lenders is closer to being finalized, the official said, with a solution nearly in hand to the problem of "negative pledge" clauses in some Greek bond contracts that prevent other creditors from getting more favorable treatment. There is unlikely to be a discussion on raising the currency bloc's bailout lending capacity, officials say, despite market expectations that the euro zone will need to take that step to prevent yields on Italian and Spanish debt from rising even further. On other hand, The European Council President Herman Van Rompuy is consulting with euro zone governments on new proposals to improve the currency bloc's economic governance that will be unveiled at a euro-zone summit on Oct. 18. Those proposals may include more firepower for the European Financial Stability Facility, the euro-zone's sovereign bailout fund, the euro-zone official said.

Meanwhile in England - today, it was revealed Meanwhile in England - today, it was revealed that MPs are set to vote on a referendum within the next few months, after a petition with more than 100,000 signatures was submitted calling for the public to be given the chance to decide whether Britain should stay in the EU. Speaking at the start of the Conservative Party in Manchester, Mr Cameron said he did not believe the UK should quit the EU. And he played down the prospect of the Government repatriating powers from Brussels in the near future. The Government's immediate priority on Europe is to get the crisis in the eurozone sorted out and revive the continent's economy, he said. The Commons Backbench Business Committee is expected to set a date before Christmas for a one-day debate in the House of Commons on a referendum on EU membership. The vote will not be binding on the Government, but if MPs back a referendum, it will put massive pressure on Mr Cameron to put the issue to the country.

The committee's Labour chairman Natascha Engel told the Mail on Sunday: "Given the crisis in the euro zone, this issue has become more relevant than ever. There is a clear majority of backbench MPs who want to debate this and we have to respond to that. "The EU today is completely different from the one the British people voted to join in 1975. It is time to examine the position again.

Oct. 02.2011

Mircea Halaciuga, Esq. 0040724581078 Financial news - Eastern Europe