Experts have been underwhelmed by an agreement at last week's meeting of finance ministers which will see national budgets vetted by Brussels before being finalised.
Under the so-called 'European Semester', finance ministers will meet in March to identify the main economic challenges facing member states. Governments will then set out their medium-term budgetary priorities and draw up national reform programmes.
The EU executive and finance ministers from across the bloc will then assess the plans and give policy advice in June and July before member states finalise their budgets for the following year.
The new regime kicks off next year and is designed to detect inconsistencies and imbalances before they blow up into full-scale crises like that which has gripped Greece and threatened to destabilise other EU countries.
Growth projections, inflation forecasts, and details of anticipated income from taxation will come under scrutiny from Europe to ensure finance ministers are not being overly optimistic.
It is the first concrete proposal from the Van Rompuy task force on economic governance to have been rubber-stamped by finance ministers and has been hailed by the Commission as a "major improvement".
Questions remain over sanctions
Critics of the plan say it is unclear what, if any, sanctions can be imposed on member states that do not take the "advice" fed back from Brussels after the Commission has examined the budgetary outline.
Zsolt Darvas, Research Fellow at Bruegel noted that the recommendations from Brussels will not be binding and the Commission will have to rely on the "moral pressure" that governments would face following official public criticism from the EU.
Enforcing tougher measures brings its own challenges as severe punishments, such as suspending voting rights, would require a Treaty change.
"Our view is that the semester will have very limited impact as without clear sanctions for those who break the budget rules, the whole mechanism lacks teeth. But tougher measures would be very difficult to achieve politically," said Vincenzo Scarpetta, Researcher at OpenEurope.
There is also widespread concern among smaller member states than any punishments or political consequences would hurt small countries more than larger ones.
The EU executive wants automatic sanctions to apply to member states that break the Stability and Growth Pact and sees participation in the European Semester as part of national commitments to economic harmony.
At the end of September, the Commission will propose a legislative package to reinforce fiscal and macroeconomic surveillance which will include "more effective incentives and sanctions".
'Plus ça change...'
Economists have questioned whether the new system will be taken seriously by departments of finance.
Daniel Gros, Director of the Centre for European Policy Studies (CEPS) noted that governments already consult Brussels on their budgetary plans and the new system will not see a significant change in this.
"Whether there is a semester or not, the key difference is whether member states will actually take into account comments from Brussels," he said.
Gros said the new system will ultimately look a lot like the current practice and warned that the discussions at the Ecofin Council will be superficial given that time constraints will prevent ministers from examining all 27 pre-budget submissions in any detail.
"It will be as before. Each country tells the Commission what it is doing and the discussion in Ecofin will be perfunctory – except for the countries under special supervision," he said.
Eurosceptics fear Brussels 'power grab'
The surveillance measures remain focused on big picture assumptions and economic trends and are unlikely to see major interference in the fine detail of national budgets.
However, some commentators remain concerned that the creeping influence of EU bureaucrats in areas of fiscal sovereignty is driven by European federalists who see the economic crisis as an opportunity for a power grab.
Leftist politicians have questioned whether increasing Brussels' influence on financial planning comes at the expense of democracy.
Eurosceptics say the EU has painted itself into a corner by introducing a one-size-fits-all monetary policy. This needs to be balanced out with tough sanctions, fiscal redistribution across the eurozone and stronger economic government – something critics say lacks democratic support.
