Tuesday

17th Sep 2019

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 18 year's of archives. 30 days 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.

Hungary tops EU anti-fraud investigation list

In its annual report, the EU's anti-fraud agency said it concluded nine investigations into Hungary and found irregularities in seven cases. In total, the agency recommended the recovery of €371m EU-wide.

Exclusive

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. Apple and Ireland appeal €13bn EU tax ruling
  2. UK PM should provide witness statement, court told
  3. Italy's ex-PM Renzi quits ruling Democratic Party
  4. German top lawmaker scolds Bettel over Johnson snub
  5. Greens decide on Tuesday on talks on Five Star joining
  6. Belgian mayors give Juncker a tongue-lashing
  7. Von der Leyen defends 'way of life' slogan
  8. Court hears case on UK's pre-Brexit parliament shutdown

Opinion

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

Latest News

  1. Defending the 'European way of life' name splits MEPs
  2. Hungary claims EU 'witch-hunt' over rule of law hearing
  3. Trumpworld In Europe
  4. How EU firms and banks help fund Amazon fires
  5. Amazon fires mean EP must rethink Mercosur trade deal
  6. EU must give full support to Ukraine to dissuade Kremlin
  7. EU divided on how to protect rule of law
  8. Nordic region to become world's most sustainable and integrated

Join EUobserver

Support quality EU news

Join us