European Commission wants sanctions to protect accuracy of statistics
The European Union is seeking the power to punish governments who massage their economic statistics, aiming to stamp out political meddling that allowed Greece to lie about its borrowings and trigger a debt crisis across the euro zone.
New rules proposed by the European Commission on Tuesday would allow the EU to apply sanctions on countries who fail to safeguard the independence of national statistics institutes or make politically-motivated appointments, saying statistics chiefs should be «entirely autonomous in their work.”
The proposal has yet to be approved by the European Parliament and EU governments, but it looks hard to reject given the intensity of investor pressures on the 17-nation euro zone and the Commission’s insistence on enforcing fiscal and debt limits to win back confidence.
“Our statistics are good but we want to go further. We want to ensure that, never again, will we have any political influence in our statistics, « said Algirdas Semeta, the EU’s Commissioner’s responsible for statistics.
“The economic crisis has shown us the importance of credible statistics … but they must be deemed credible,» he told a news conference to launch the plans.
The 27-nation bloc’s statistics office Eurostat has been complaining about the need for accurate budget data in Europe since 2004.
But it was only in 2010, the year after Greece disclosed vast hidden debts, that EU finance ministers agreed to grant Eurostat more powers.
While it can now get access to government accounts, as well as social security data, that reform came too late to stop a collapse in investor confidence that forced Greece, Ireland and Portugal to seek international bailouts and that now threatens the far bigger economies of Spain and Italy.
Greece has already signed up to the Commission’s new proposal, pending its approval probably by the end of this year, promising to fully respect the independence of the Greek statistics institute, ELSTAT.
Failure to comply could result in «infringement procedures» the Commission said in a statement, referring to a step-by-step process that can lead to fines for a member state or the freezing of development aid, in the case of poorer EU countries.
The latest flare-up in the crisis, after weeks of calm induced by copious European Central Bank lending to battered commercial banks, was sparked by Spain’s new government announcing it had inherited a worse-than-expected deficit from its predecessor.
Some officials in Brussels privately suspect the new Spanish government of Prime Minister Mariano Rajoy overstated the 2011 budget deficit so this year’s data might look better, something Madrid strongly denied.
Commission inspectors have been in Spain to evaluate public accounts after Madrid said at the end of February that its deficit was 8.5 percent of economic output last year, above the Commission’s 6 percent forecast.
It will publish its reading of Spain’s 2011 budget deficit on April 23, Semeta said.
The Commission also raised concerns in 2010 about Bulgarian statistics after revealing a hidden deficit for 2009.
“Of course, governments have a tendency to be a little bit too optimistic about future economic growth,» said Joost Beaumont, a senior economist at ABN Amro in Amsterdam and a former statistician at the Dutch statistics office CBS.
“In the case of the Spain, the shortfalls came from regional and local authorities and provision of data to the statistical office was probably not good and that of course can be induced by politicians,» he said.
Luxembourg-based Eurostat is widely viewed as credible by economists and investors and publishes regular data ranging from inflation to labour costs and unemployment, but it is still reliant on individual countries’ figures.
[Reuters]
