Wednesday

22nd May 2019

EU agrees controversial peer review of national budgets

  • Member states could now end up looking at each others' revenue and expenditure plans (Photo: ansik)

EU finance ministers have reached broad agreement on a controversial plan to review each others' national budgets, together with earlier sanctions for member states that break the bloc's fiscal rules.

Also meeting in Luxembourg on Monday (7 June), an earlier gathering of euro area finance ministers approved the principle component of the zone's unprecedented €750 billion rescue mechanism.

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

Speaking to journalists after chairing his second taskforce meeting on economic governance with EU27 finance officials, most of them ministers, European Council President Herman Van Rompuy said governments had agreed to show their national budgets to each other and to the European Commission before seeking national parliamentary approval.

Originally put forward by the commission in May, the pre-vetting of national budgets by Brussels had previously met with stern opposition from a number of capitals including Berlin, London and Stockholm.

Under the new system, which still needs final approval from EU leaders, each government will present its broad estimates for growth, inflation, revenue and expenditure levels in the spring, roughly six months before national budgets go through parliaments.

Any government planning to run a deficit "will have to justify itself to its peers" on why this should be allowed, said Mr Van Rompuy, adding that members with debt levels above 60 percent of GDP would come in for even tougher scrutiny.

After the meeting, British officials underlined the primary role of national parliaments however, in an indication that precise details still need to be worked out.

Sanctions

The taskforce, set up by EU leaders in March, also agreed on the need for earlier and more "graduated" sanctions for states that break the bloc's budgetary rules - known as the Stability and Growth Pact.

The pact sets out maximum deficit and debt thresholds of three and 60 percent of GDP, respectively, with possible fines for overspending member states of up to 0.5 percent of GDP, although in practice the fines have never been levied.

In future, governments could "get into trouble" with their peers even before their deficits reached the three percent threshold, said Mr Van Rompuy.

"Up to now, you only got fined for driving through the red light of the three percent," the former Belgian prime minister told journalists. "From now on, you could also be in trouble for crossing the orange light."

Recently floated sanctions ideas have ranged from reduced EU funding to a loss of voting rights for ministers attending EU meetings in Brussels. Monday's talks primarily concentrated on financial sanctions, said Mr Van Rompuy, as non-financial sanctions would involve changing the EU treaty.

A number of EU states have raised objections to a withdrawal of EU structural funds as a form of punishment, however.

"We think that if there are to be sanctions, they should be of a universal character. It can't be, for example, taking away structural funds, because these are reserved only for some [of the poorest] EU countries," Poland's Europe minister, Mikolaj Dowgielewicz, told the Polish press agency, PAP, in an exclusive interview.

Eurozone bail-out

Earlier on Monday evening, euro area finance ministers reached an agreement on a €440 billion "special purpose vehicle" (SPV) - the main component of a massive eurozone support mechanism hastily agreed by EU leaders last month as Greece's debt crisis threatened to spread to other members of the single currency.

The SPV will be based in Luxembourg and will issue debt on capital markets, backed by individual guarantees provided by all 16 members of the eurozone. The money raised in this way can then be lent to struggling eurozone administrations, but only after a restructuring programme is agreed.

"There is no uncertainty left  ... about the ability to provide support," EU economy commissioner Olli Rehn said after the meeting, just hours after the euro currency touched another four-year low versus the dollar before gradually recovering.

EU top court backs Canada trade deal in ruling

The European Court of Justice ruled on Tuesday that the EU-Canada free trade agreement, and its controversial dispute settlement mechanism, is in line with the bloc's rules.

EU and Japan in delicate trade talks

The Japanese PM comes to Brussels to discuss the first results of the new EU-Japan free trade deal, plus WTO reform - a sensitive topic before he moves onto Washington to face Donald Trump.

News in Brief

  1. German MPs show interest in 'Magnitsky' sanctions
  2. CoE: Rights violations in Hungary 'must be addressed'
  3. EU affairs ministers rubber-stamp new ban on plastics
  4. Private companies campaign to boost turnout in EU poll
  5. Austrian government chaos as far-right ministers step down
  6. Farage hit by milkshake during campaign tour
  7. New president dissolves Ukraine's parliament
  8. Sweden Democrat MEP ousted for revealing sex harassment

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us