On Wednesday, the so-called "six-pack" on economic governance is expected to pass by a safe majority in the European Parliament.
The rules are expected to go through even though Socialist and Green MEPs warn they will reject at least half of the package, saying it focuses too heavily on austerity.
"Though we support a more effective Stability and Growth Pact and debt reduction, the reforms focus too heavily on spending cuts and ignore the use of revenues to reduce debts. This way, we will unload a heavy burden on the poor and future investments, such as in education, will be buried by this unbalanced fiscal consolidation", Sven Giegold from the German Greens told EurActiv.
But as the debt crisis continues to deepen, many MEPs want the package to pass in spite of their reservations. "I am not expecting many surprises," John Schranz, a spokesperson for the Parliament's Economic and Monetary Affairs Committee said.
"The Dutch delegation will go against their own group" an anonymous parliamentary source said, explaining that the Socialist umbrella group is deeply split on the vote.
Socialists, like German MEP Udo Bullmann, have argued that the package should include measures to realise the EU's 2020 strategy to boost growth and jobs. He also suggested that countries with high debts should be given more leeway if they are trying to implement the strategy's goals but this had little support from other members.
"Whoever wants to survive the crisis, must also learn to grow out of it. The necessary fiscal consolidation can only work when it is coupled with new initiatives for growth," Bullman told EurActiv.
Over the past year of climbing bond yields and successive downgrades in four EU countries, Brussels has hurriedly tried to rewrite the Stability and Growth Pact, which sets out deficit thresholds countries should not surpass.
The package has been mired by political battles as countries and MEPs have fought bitterly on who should have the ultimate say on what happens to debt offenders.
The row stems from resentment in Brussels that France and Germany weakened the pact in 2002 when they ignored repeated warnings from the European Commission that their public deficit was too high.
France adamantly opposed measures proposed by the European Parliament whereby one country would need a majority of other countries to block the Commission's warning. This would potentially make it harder for countries to ignore the Commission's instruction on getting their debts back to acceptable levels.
Below is a rundown of the package's contents:
- More automatic procedures using reversed qualified majority voting (RQMV) to issue warnings and sanctions against debt offenders. Member States will need a qualified majority to block them.
- A European semester which is an annual national budget assessment procedure by the European Commission
- More power for the Commission which can ask for more information and can conduct spot checks at national level
- A new fine (0.2% GDP) for fraudulent statistics on deficits and debt
- A sanction held in an interest bearing deposit (0.1% GDP) for countries which fail to act on recommendations to rectify a macroeconomic imbalance
- Greater independence of statistical bodies and standards for the compilation of statistics
- Safeguards for social bargaining processes and wage setting
- A call for Eurobonds
- Public hearings where finance ministers will either in person or represented by the rotating presidency exchange views on debt problems
- Surveillance of macroeconomic imbalances including both current account deficits and surpluses
- A scoreboard with thresholds governing macroeconomic imbalances
- Greater transparency on texts and discussions, involving the European Parliament and national parliaments
- More refined indicators for macroeconomic imbalances, to ensure that spillover effects of national policies across member states are taken into account alongside macroeconomic imbalances, the real economy and social indicators
