The Dutch finance ministry is very concerned about the German position in the discussion on European tax rules. Germans believe that public finances must be sound and that work must be done if not. And Germany is right according to macroeconomist Edin Mujagic.
Even though many European countries seem to disagree with Germany, and the Netherlands are therefore concerned about the German position, Mujagic believes that it makes sense. “Not for an ideological reason, but simply because economic history teaches us that sound public finances bring stability to a country”.
‘Economic history teaches us that sound public finances bring stability to a country’
It underlines this at a political, economic and social level. Furthermore, such stability would increase the growth of prosperity in a country and ensure innovation. ‘It makes a country stronger.’
Invest
Mujagic therefore believes that a country does not necessarily have to go into debt in order to invest in itself. Germany, Switzerland, Austria and the Netherlands, for example, share a common set of financial norms and values according to Mujagic, and therefore have a stable country. “They believe in a strong currency, low inflation and sound public finances,” Mujagic continues. “On the other hand, there are countries like Greece and Italy, and it’s no coincidence that these are the weak countries.”
Although those economically weaker countries – partly due to the Corona Recovery Fund – appear committed to reforms and improving public finances, Mujagic believes there is a deterioration. “Since day one of European Monetary Union, those countries have been working to get their finances in order,” he says. ‘And the bottom line is now that the situation has only gotten worse. So it doesn’t work.’
Concept
Even the European Commission seems to realize this and concludes that it is unable to force some countries to reform. That is why the European Commission has now entered into agreements which state that economically weaker countries must take steps in the right direction. “I understand that they have now taken that step,” concludes Mujagic. “But if you leave that to countries that have demonstrated in good economic times that they’re not willing or able to do that, then it’s really hopeless.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
