Béla Galgóczi

Potential Impacts of the Adoption of the Euro for the CEE New Member States

18 Seiten · 5,08 EUR
(November 2007)

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Béla Galgóczi highlights some contradictions in EU policies with regard to the accession of Central and East European countries to the euro zone. When the Commission rejected Lithuania's application for the adoption of the euro, one of the issues was that it regarded wage growth in Lithuania as a risk factor. However, wage convergence would be a central element of European social cohesion. While the Lisbon Strategy foresees increased public spending in infrastructure, research or education in order to foster international competitiveness and the legitimization in terms of a European Social Models demands a certain level of social expenditure, the Stability and Growth Pact criteria demand rigid fiscal and monetary policies. “Given the ‘straitjacket’ of the current Maastricht rules is not fitting the specifics of these countries,” Galgóczi concludes”, “growth, employment, social cohesion and real convergence seem to be in danger. Governments pursuing such criteria will put economic and social convergence of their countries at risk”.