Saturday

21st May 2022

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.

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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.

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