27th Oct 2016

Stronger budgetary surveillance laws up for agreement

  • The EU has rushed to get budgetary surveillance laws into place to prevent a repeat of the current eurozone crisis (Photo: alles-schumpf)

EU finance ministers meeting next week are set to sign off a first agreement on laws that would strongly increase Brussels' power to instruct eurozone countries on how to spend their national budgets.

Applying to the 17 members of the single currency only, the two laws require that all national budgets are presented to the commission for "assessment" at the same - by 15 October latest, suggests a draft of the agreement.

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.

The EU executive would have the power to ask for a revision of the budget if it considers it likely to lead a breach of the rules underpinning the euro, which bind member states to keep minimal budget deficits.

The 17 would be required to put in place independent bodies and to base their national budgets on independent forecasts, a move to depoliticise the process of drawing up the budget in member states by subjecting it to technocratic eyes.

Countries already breaching the budget deficit rules will have to issue regular reports to Brussels and agree a 'partnership programme' on how to get back on the right fiscal track.

Those either experiencing or at risk of "severe"difficulties with their finances or those already in a bailout programme will be subject to far more invasive monitoring.

Essentially, they would lose the power for any kind of discretionary spending. The draft rules would entitle the commission to grill them on the "content and direction" of fiscal policy, while Brussels would be entitled to see sensitive information such as on the financial health of individual banks.

Bailed-out euro members would remain under this hyper-surveillance regime until they have paid back at least three quarters of the money lent to them.

Much of the draft, proposed by the commission last November, is to be approved by finance ministers at their Tuesday meeting (21 February) but a clause that would have essentially forced a country to undergo a bailout programme has been removed, said a contact close to the negotiations.

The laws come on top of six further budgetary surveillance laws applying to all 27 member states that came into force in December.

They form part of the EU's attempt to make sure the current sovereign debt crisis will never happen again, although critics say the laws infringe on national democracy.

Following the ministers' green light, the draft will then go to parliament with real negotiations between the two sides expected to come in April after the proposal has made its way through committee.

One of the sticky issues will be how much these laws should encompass what is in the fiscal discipline treaty, an intergovernmental document covering much of the same area, due to be signed by EU leaders in March.

If the scope of these laws is too wide, it would raise the awkward question - already to be heard sotto voce in Brussels - about the point of having the fiscal treaty at all.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

Stakeholders' Highlights

  1. EU-China ForumDebating the Future of the EU-China Relations on 28 November in Prague
  2. COMECEMigrants: From Fear to Compassion
  3. Birdlife EuropeBusiness as Usual - Juncker Snubs Environment and Protects Broken CAP
  4. EFADraft Bill for a 2nd Scottish Independence Referendum
  5. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  6. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  7. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  8. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  9. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  10. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  11. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  12. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16