23rd Aug 2019

Economic control hangs in the balance

The European Court of Justice in Luxembourg will on Tuesday (13 July) hand down what may be the most significant ruling in its 46 year history.

The case may not sound like much (Judgement C-27/04 Commission v Council), but at stake is who is in control of the EU economy - Brussels or member states.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The European Commission took the Council of member states to court over its decision in November to suspend disciplinary procedures against France and Germany for repeatedly breaking EU economic rules.

Brussels had recommended that France and Germany take measures to bring their budget deficits below the maximum EU permitted level of three percent of gross domestic product (GDP).

But Paris and Berlin persuaded enough of their colleagues to vote down these recommendations and place the procedure "in abeyance", effectively killing off the rules that underpin the euro.

The Commission argues that the Council had no right to suspend the procedure it recommended - a disciplinary procedure that could result in fines of billions of euro.

But the Council maintains that the final decision rests with member states.

What happens if...

Whichever side wins, there are serious consequences for decision-making in the EU economic sphere.

If the Commission wins and the Court decides that the member states had no right to suspend the disciplinary procedure, then it could annul the member states' declaration and the member states would have to go back to the Commission's recommendations to France and Germany that they suspended in the first place.

"We would be back to where we started", says Guillaume Durand, an expert on economic governance at the European Policy Centre in Brussels.

"But as the same people would be around the table, it is hard to see why there would be a difference".

If the procedure were to be re-started and carried through to its conclusion, Germany and France - who this year will have exceeded the limit for three consecutive years - could in theory next year face fines of up to 0.5 percent of their GDP.

If these fines were indeed dished out, Germany would face a sanction of just under 10 billion euro and France could expect a fine of just over seven billion.

In practice, though, few analysts believe the fines would ever actually be levied.

Death to the pact

However, France and Germany are not the only member states currently in breach of the rules. The Netherlands, Greece and Italy all have deficits over three percent of GDP and could face similar punishment.

If the Court decides that the member states acted within their legal rights to suspend the procedure, it effectively buries all claims from the Commission to be the supervisor of EU economic policy.

And with another huge row brewing between member states and the Commission over the EU budget for 2007-2013, it would give EU capitals the upper hand in an ongoing power struggle.

Power struggle

Some analysts believe that winning this power battle is more important than the actual implications of the result. Mr Durand says that the case is "a largely symbolic issue" and that the row is really about control.

"It's more for the Commission to show the Council that they can not just do what they want", he says.

And Jorgen Mortensen, an expert at the Centre for European Studies argues in a recent paper that the crisis over the economic rules, "brought into the open a conflict that had been brewing ever since the creation of the EEC in 1958: the sharing of competences for macroeconomic policy-making between the national governments and the EU institutions".

Neither side involved in the case was prepared to speculate on what implications the result might have.

A spokesman for the EU Presidency said, "we will have a reaction tomorrow" and a Commission spokesman said that he would not like to comment on "hypothetical questions".

Institutions grapple for EU economic control

Legal teams from the European Commission and the Council of Member States battled head-to-head at the European Court in Luxembourg today (28 April) in a bid to retain supremacy over EU economic policy.

Date set for crucial euro pact ruling

The European Court of Justice on Monday announced that it would reveal on 13 July its judgement regarding the row between the Commission and member states over the rules that underpin the euro.

Brussels wins crucial court case over euro rules

France and Germany are again facing the prospect of record fines after the European Court of Justice today overturned a decision suspending infringement procedures against them.


Brexit row delays financial products transparency review

A European financial regulatory body set up after the financial crisis is at loggerheads with the European Commission over whether to carry out a transparency review of certain financial products. The reason: Brexit.

Commission defends Mercosur trade deal

EU commissioners defended a far-reaching free trade agreement between the EU and four Latin American countries, against critics who fear it will damage European farmers' livelihoods and the global environment.

EU hesitates to back France over US tariff threat

France has passed a new tax on tech companies that will affect US global giants like Facebook. Donald Trump has threatened retaliatory tariffs over it. The EU commission says it will "coordinate closely with French" on the next steps.

News in Brief

  1. Ocean Viking to disembark in Malta after ordeal
  2. Germany joins France in world outcry on Brazil fires
  3. British people lose faith in Brexit deal
  4. Brexit hardliners want further changes to EU deal
  5. German manufacturers confirm fear of recession
  6. Belgian socialists and liberals scrap over EU post
  7. Fall in EU migration leading to UK skills shortages
  8. Switzerland makes post-Brexit flight preparations


Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. Spain heading for yet another general election
  2. EU to discuss Brazil beef ban over Amazon fires
  3. 'Our house is burning,' Macron says on Amazon fires
  4. What happens when trafficking survivors get home
  5. EU states and Russia clash on truth of WW2 pact
  6. EU considers new rules on facial recognition
  7. EU to pledge Africa security funds at G7 summit
  8. Letter from the EESC on per diem article

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Join EUobserver

Support quality EU news

Join us