Tuesday

31st Mar 2020

Tougher budget sanctions to cover all EU funds

  • Close-up of euro banknote showing Greece and Italy: states that break the EU's budgetary rules could see funding from Brussels withheld (Photo: Alessandro Marotta)

EU member states that break the bloc's budgetary rules could see their EU payments withheld, including weighty farm handouts, under plans to be presented by the European Commission this Wednesday (30 June).

Current rules already allow EU cohesion funds to be withheld, although in practice this has never happened, but sources suggest the upcoming communication will seek to widen the net of potential financial sanctions to all EU payments.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

Eastern European states led by Poland have recently complained that concentrating sanctions on a suspension of EU cohesion funds, intended to boost development in the EU's poorer regions, unfairly targets less well-off countries.

By including farm payments, roughly 40 percent of the EU's €120 billion annual budget, together with varying types of structural funds, the commission proposals would greatly increase the size and scope of potential fines for member states that break the Stability and Growth Pact.

The pact limits deficits to 3 percent of GDP and debt to 60 percent of GDP, but both barriers have been breached by numerous member states, even before the financial crisis took hold.

Wednesday's text, which is still subject to changes, seeks to narrow the scope of a commission communication on European economic governance published in May, taking into account a series of member state positions that have been revealed since then.

Controversial non-financial sanctions backed by Germany, such as the suspension of voting rights for national ministers attending meetings in Brussels, are unlikely to appear in the document.

Greater emphasis is set to be placed on government debt levels, with an 'excessive debt procedure' involving suggestions from Brussels on how member states should reduce their debt piles, likely to mimic the reporting system under the current 'excessive deficit procedure'.

With the crisis leading to calls for structural economic forms, the communication is also set to list a number of macroeconomic indicators, such as the evolution of salaries, that could be used to help monitor national competitiveness levels.

States that fall behind in this area could also potentially receive a financial penalty.

The commission intends to bring forward the necessary legislative proposals this September in order to turn the suggested list of tougher budgetary measures into law.

With EU officials hoping to start a new European Semester system in the spring of 2011, under which member states would 'peer review' the main headings of each others' national budgets, the clock is ticking to complete the necessary legislative steps under the up-coming Belgian EU presidency.

A feeling that a unique window of opportunity exists at the moment is also adding to the sense of urgency, with a return to stronger economic growth likely to diminish the reformist zeal created by eurozone's fiscal crisis.

EU budgetary proposals draw immediate rebuke

European Commission proposals to step up economic co-ordination inside the European Union have drawn an immediate rebuke from Sweden, with Stockholm deeply unhappy over plans suggesting member states should scrutinise each others' national budgets ahead of national parliaments.

No breakthrough at EU budget summit

EU leaders failed to reach agreement on the EU's long-term budget, as richer states and poorer 'cohesion countries' locked horns. The impasse continues over how to fund the Brexit gap.

EU leaders struggling to break budget deadlock

Cuts to innovation, space, neighbourhood and other programme-spending push down the latest budget proposal on the table of EU leaders. Rebates could stay on, to win the support of the net-payers for a deal.

Unhappy EU leaders begin budget haggle

EU leaders arriving at the Brussels summit criticised the budget proposal of EU Council president Charles Michel, as richer member states insisted holding onto their rebates, while poorer countries wanted to avoid deep cuts to their subsidies.

News in Brief

  1. 12-year old Belgian girl dies of coronavirus
  2. EU Commission: no 'indefinite' emergency measures
  3. Denmark plans 'gradual' return to normal after Easter
  4. Globally over 780,000 cases of coronavirus, 37,000 deaths
  5. EU states losing 3% of GDP a month, IMF says
  6. Fruit pickers need to cross borders too, EU says
  7. Former Slovak minister to become EU envoy on Kosovo-Serbia
  8. Hungary's Orban wins rule-by-decree vote in parliament

Vietnam sent champagne to MEPs ahead of trade vote

A trade deal with Vietnam sailed through the European Parliament's international trade committee and after its embassy sent MEPs bottles of Moet & Chandon Imperial champagne over Christmas.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Stakeholders' Highlights

  1. UNESDAMaking Europe’s Economy Circular – the time is now
  2. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  3. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  4. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  5. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  6. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms

Join EUobserver

Support quality EU news

Join us