Saturday

23rd Sep 2017

EU leaders to consider eurozone budget, reform 'contracts'

  • Council meeting room: EU leaders will later this month consider giving more oversight powers on employment, pensions and social areas to the European Commission (Photo: Valentina Pop)

EU leaders meeting later this month in Brussels will try to iron out disagreements on a new eurozone banking supervisor and consider further steps to deepen the economic union, such as a eurozone budget and binding "contracts" on reforms.

According to draft guidelines discussed on Wednesday (3 October) by EU ambassadors for the summit conclusions on 18-19 October, member states should consider "individual contractual arrangements with the European level on the reforms they commit to undertake and their implementation."

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The idea, although controversial, is not new. Germany has long fought to have more supervision of national decisions on budgets, labour market reforms, pension schemes or retirement age in member states.

It sees this as a quid pro quo for its approval of the Greek, Portuguese, Irish and now Spanish bailouts, the setting up of a permanent bailout fund, and the tacit endorsement of a bond-buying scheme by the European Central Bank.

EU officials familiar with the discussions among member states say it is still too early to say whether to expect a deal at the October summit on this extra layer of supervision.

The same goes for the idea of having a budget for the 17 eurozone countries only.

"There seems to be more impetus behind it, but the most we can expect is for member states to say they are willing to explore it," one EU official told this website.

French finance minister Pierre Moscovici has already floated the possibility of a eurozone budget being used for unemployment benefits in countries under particular pressure, such as Spain where over a quarter of the workforce is out of a job.

But, said the EU source, the budget would rather needed to be 'new money' on top of the common EU budget for 2014-2020 currently being negotiated. Otherwise these negotiations risked being completely derailed.

A unanimous decision among all 27 members would be needed to allow for any non-standard use or splitting of the EU budget.

Meanwhile, the EU commission is planning to come up with its own blueprint on how eurozone budget could be achieved

One idea is to have loan guarantees on the back of the EU budget used for eurozone states only. This could be in the form of what is now the nearly exhausted European Financial Stability Mechanism (EFSM) - a €60 billion fund used for the Irish and Portuguese bailouts.

Another idea is to have "own resources" - such as a financial transactions tax - fund this eurozone-only pot.

At least nine countries have to endorse the idea for the tax to come into force. So far, only Germany, France and Austria have written to the commission in support of it.

The commission blueprint is only expected to be issued after the October summit, but before a November meeting of EU leaders aimed at sealing a deal on the next EU budget for 2014-2020.

Parliament backs €9 billion EU budget hike

MEPs defied calls by national governments to rein in EU budget spending on Thursday, instead restoring most of the €138 billion settlement proposed by the European Commission for the 2013 budget.

UK threatens to veto EU budget

British conservative Prime Minister David Cameron has said he will block the upcoming EU seven-year budget cycle if it goes against UK interests.

News in Brief

  1. Dutch state appeals ban on taking air-polluting measures
  2. May proposes 2-year transition period after Brexit
  3. May to call on EU's 'sense of responsibility'
  4. Catalonia has 'contingency plans' for independence vote
  5. Last German polls confirm Merkel's lead
  6. EU to step up sanctions on North Korea
  7. Tusk calls 'euro summit' in December
  8. Report: May to seek two-year EU transition

Stakeholders' Highlights

  1. EU2017EEEU Finance Ministers Agreed to Develop New Digital Taxation Rules
  2. Mission of China to the EUGermany Stands Ready to Deepen Cooperation With China
  3. World VisionFirst Ever Young People Consultation to Discuss the Much Needed Peace in Europe
  4. European Jewish CongressGermany First Country to Adopt Working Definition of Antisemitism
  5. EU2017EEFour Tax Initiatives to Modernise the EU's Tax System
  6. Dialogue PlatformResponsibility in Practice: Gulen & Islamic Thought
  7. Counter BalanceHuman Rights Concerns Over EIB Loan to the Trans Anatolian Pipeline Project
  8. Mission of China to the EUChina Leads the Global Clean Energy Transition
  9. CES - Silicones EuropeFrom Baking Moulds to Oven Mitts, Silicones Are a Key Ingredient in Kitchens
  10. Martens CentreFor a New Europeanism: How to Put the Motto "Unity in Diversity" Into Practice
  11. Access MBAGet Ahead With an MBA Degree. Top MBA Event in Brussels
  12. Idealist QuarterlyIdealist Quarterly Event: Building Fearless Democracies With Gerald Hensel