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Tuesday 2 September 2014

Czech cabinet says yes to EU fiscal compact

Published 25/03/2014 | 02:30

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Czech Prime Minister Bohuslav Sobotka
Czech Prime Minister Bohuslav Sobotka

THE Czech cabinet has agreed to join the European Union's fiscal compact on budget stability, in a move it said underlined Prague's support for closer EU integration after a period of relatively eurosceptic government.

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Apart from the Czech Republic, the only other member states not to have adopted the compact are Britain and EU newcomer Croatia, which joined the bloc last year.

The Czech parliament must still approve the decision by Prime Minister Bohuslav Sobotka's new centre-left cabinet.

The previous centre-right government had refused to join the compact, which enshrines legally binding fiscal rules.

"With this decision, we return to the mainstream of European integration. It is an important step which naturally is on the path to the future adoption of the common European currency," Mr Sobotka told reporters.

Mr Sobotka's government has said it will not set a euro adoption date during its term. Mr Sobotka has said he could see the Czech Republic joining the eurozone around 2020.

The compact, championed by Europe's biggest economy, Germany, obliges signatory countries to keep their budget in balance or surplus, with a structural deficit no higher than 0.5pc of national output under normal circumstances.

Like other non-eurozone countries, the Czechs will not for now adopt clauses that would entail penalties if they fail to meet the fiscal targets. They will only join that part of the accord on joining the euro.

Parliamentary ratification will require a constitutional majority. Mr Sobotka's coalition lacks the necessary majority, but plans to negotiate on the support of other parties. (Reuters)

Irish Independent

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