The EU has room for a positive response to the Brexit outcome. - H.J. Witteveen
"We can and must give up the restrictive and unrealistic objectives for the budget deficits of 0.5% GDP and return to the original 3% GDP as an average of cyclical fluctuations".
On May 29th 2016, Alumnus H.J. Witteveen rejected all arguments that are being used to defend the low budget deficits of GDP. Under this regime many conflicts with European governments have arised, however, we did accomplish many necessary reforms in budget spending that are currently being carried out. According to Witteveen this improves the opportunities for future growth. "Time has arrived to - enforcing these reforms - give those European countries with a budget deficit below the 3% the opportunity to extra investments which would enhance growth, offer more job opportunities, and more income which in turn enlarge future opportunities for growth." This should work as an incentive for the countries with a budget deficit above the 3% to improve their situation, providing a better balance between countries. This would give the following advantages for the EU as a whole:
- Larger growth creates opportunities for more important investments in infrastructure, security and defense.
- The ECB can mitigate her extreme quantitative easing, because a part of the necessary incentive of the economy is being over powered by fiscal policy.
- This strategie would have positive psychological influence as trust in the future of the European Union would be reinforced.
This is article is taken from and adapted from 'Opinie & Dialoog' in 'het Financieel Dagblad'