Monday

23rd Jan 2017

Brussels' new budget powers draw first rebuke

  • Belgian Prime Minister Elio Di Rupo (c) - the commission's warning was a rude awakening for his new government (Photo: fotospresidencia5)

The European Commission's sweeping new powers in budgetary oversight drew its first criticism on Thursday (12 January), when a Belgian minister said the EU institution lacks the democratic legitimacy to alter national spending plans.

"The commission is today going too far with its measures. Who knows [economic affairs commissioner] Olli Rehn? Who knows where he has come from and what he has done? Nobody. Yet he tells us how we should conduct economic policy. Europe has no democratic legitimacy to do that," Belgian enterprise minister Paul Magnette said in an interview with Flemish newspaper De Morgen.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He said Belgium accepts that it has to get its budget deficit under the three percent of GDP required by euro rules, but "the margin to determine how we do it must remain free."

Philippe Maystadt, also a Belgian and the former head of the European Investment Bank, made similarly critical remarks the day before. He said the commission lacked the legitimacy and efficiency to directly penalise a member state for its budget.

The commission caused a flurry in Belgian political circles over the weekend by warning that the country needed to curb this year's spending. Rehn suggested the government's calculations that the budget deficit for 2012 would be 2.8 percent were too optimistic and asked for a cut of between €1.2 billion and €2 billion.

Belgium eventually settled on freezing €1.3 billion in spending, a move that saw it escape the threat of monetary sanctions on Wednesday (11 January) when the commission assessed the matter.

But the country's run-in was a foretaste of what is to come under the new rules - in place since mid December - designed to stop the eurozone debt crisis from being repeated.

The rules require countries to submit their annual budgets to the commission for review with fines of up to 0.2 percent of GDP for breaches of the deficit limits.

Hungary - a non-euro member - was on Wednesday told it could lose millions of euros in EU funds if it does not toe the budget line.

Although the so-called six-pack of laws went through the ordinary legislative channels in Brussels - with much back and forth between MEPs and member states about the nature of the sanctions system - commission officials and others have long warned that the power of the rules has been underestimated.

Underlining the point earlier this week, Rehn said that this year would see a "profound transformation" in economic governance.

Responding to Magnette's criticism, a commission spokesperson Thursday said: "We held a democratic debate on this with the European Parliament and the 27 governments of the EU, including the Belgian government."

"The European Commission does not have a political agenda when it tries to apply its rules. Its decisions are based on rigorous economic analysis."

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

News in Brief

  1. Sweden to host EU social summit
  2. US Congress may Trump-proof Russia sanctions
  3. Fury over UK 'cover up' of failed missile test
  4. Theresa May: I will not be afraid to stand up to Trump
  5. Brexit will destroy NI peace deal, says Gerry Adams
  6. EU housing price increase by 4.3%
  7. EU trade chief says UK deal will take 'couple of years'
  8. German defence spending boost not enough for Nato goal

Stakeholders' Highlights

  1. Dialogue PlatformThe Influence of Turkish Politics in Europe After the Coup Attempt
  2. World VisionEU Urged to do Better Ahead of Helsinki Conference on Syria
  3. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  4. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  5. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  6. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  7. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  8. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  9. European Free AllianceMinority Rights and Autonomy are a European Normality
  10. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  11. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  12. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London

Latest News

  1. Future of euro on EU agenda This WEEK
  2. Pope warns populism could lead to 'saviours' like Hitler
  3. How the EU can protect the world’s forest by tackling corruption
  4. Leftist newcomer takes lead in French Socialist primary
  5. Far-right groups pledge allegiance ahead of elections
  6. Trump pledges US-first foreign policy
  7. GMO opt-out plan remains in waiting room
  8. Trump: New sheriff in town