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Commission lifts veil on future euro stability plans

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Published 17 September 2010, updated 20 September 2010

The enforcement of future budget discipline rules must "leave no room for slippage," said EU Economic Affairs Commissioner Olli Rehn, lifting the veil on proposals due to be presented on 29 September.

Drawing parallels with sport, Rehn said enforcing the EU's upcoming new rules "should not be more complicated than in a football game".

"The players cannot start discussing the rules of the game with the referee every time they commit a foul," he told the European Parliament's economic affairs committee on Wednesday (15 September).

The debate over economic governance reforms, launched in the midst of the Greek debt crisis, has been deadlocked over what sanctions to apply for countries that break the EU's budget discipline, enshrined in the Stability and Growth Pact (EurActiv 16/09/10).

Rehn, who is currently drawing up proposals to revise the pact, says he wants the sanctions to be more "automatic" in order to prevent political interference from blocking the process.

To ensure sanctions are effectively applied, Rehn said he wants to make it harder for member states to stop them. Until now, sanctions for excessive deficit have always been blocked as soon as they have reached the approval stage in the EU's Council of Ministers, which is made up of representatives from the Union's 27 member states.

Preventing political interference

"Specifically, we foresee the adoption of a 'reverse majority voting' procedure, whereby the proposals by the Commission for the application of the […] Excessive Deficit Procedure (EDP) should be considered adopted unless the Council rejects them within a certain deadline".

"Clearly, respect on the part of the Council of the Commission's independent proposals of the case underlying EDP decisions will be crucial for the reinforced economic governance to work as intended," Rehn explained.

Another aspect will be to widen economic surveillance to macro-economic "indicators" such as productivity, unit labour costs, employment and others in order to identify and tackle imbalances in a preventive manner.

"Where necessary we will issue country-specific recommendations. We foresee also an enforcement mechanism for Euro Area Member States in case of serious non-compliance with the recommendations," Rehn said.

The proposals are due on 29 September and will be submitted for approval to EU member states and the European Parliament.

Addressing MEPs, Rehn challenged them to adopt the Commission's upcoming proposals swiftly, using a fast-track procedure. "Time is of essence here," he said, urging Parliament to "set the target for adoption of these proposals before summer break next year".

Positions: 

Next steps: 
  • 29 Sept. 2010: Commission to table proposals for sanctioning budget offenders under revised Stability and Growth Pact.
  • 30 Sept.-1 Oct. 2010: Informal Ecofin meeting and meeting of Van Rompuy task force.
  • 28-29 Oct. 2010: EU summit due to adopt final plans for revised Stability and Growth Pact.
  • By summer 2011: New Stability and Growth Pact to be finalised by Council and Parliament.
Preparing new rules: Rehn
Background: 

In March, EU leaders agreed on closer economic coordination in the EU in response to the Greek debt crisis (EurActiv 29/03/10).

In order to give teeth to the surveillance system, the European Commission is proposing to sanction member states which do not respect the budgetary discipline set out in the Stability and Growth Pact.

To flesh out proposals, EU leaders decided to launch a task force, chaired by European Council President Herman Van Rompuy, and made up of the finance ministers from the 27 EU member states.

In September, the ministers agreed on a "semester" of economic policy coordination that will allow EU countries to review each others' draft annual budgets before they are adopted at national level, with an early peer-review system aimed at preventing a repeat of the Greek sovereign debt crisis (EurActiv 08/09/10).

But the issue of sanctions has remained a bugbear in the negotiations.

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