Brussels, 18/05/2010 (Agence Europe) - The EU member states' finance ministers held a very lively debate about the European Commission's ideas on beefing up economic governance, explained the Spanish finance minister Elena Salgado after the Tuesday 18 May ECOFIN Council. The idea behind the Commission's proposals is to strengthen early warning surveillance, deal better with macroeconomic imbalances and create a permanent system to ensure stability in the eurozone. It is not easy at this stage to see what the outcome of the current drive will be, although some member states are reluctant to countenance the idea of a “European semester” being introduced for peer review of eurozone member states' national budgets.
EU Commissioner Olli Rehn commented: “I received by and large encouraging feedback to the Commission's proposals”, anxious to calm fears by explaining the scope of the peer review of eurozone member states' budgets. He said the idea was not to examine draft budgets line by line but rather to give a more European tinge to debate at national parliaments. The peer review should identify any divergences between national priorities and EU economic policy. Eurogroup, the group of eurozone finance ministers, would then issue recommended improvements to the national budgets, Rehn told reporters. He hopes that the mooted “European semester” can be piloted in 2011. Salgado said that the Commission was not planning to take over democratic sovereignty from the national parliaments.
Speaking before the Eurogroup meeting on the day before the ECOFIN Council, the chair of the Eurogroup, Jean-Claude Juncker, said that everyone thought that the Commission's ideas were a step in the right direction. He said the idea of submitting draft national budgets to peer review had its virtues. He was keen to reassure countries reluctant to allow interference from the EU (see EUROPE 10139) that nobody was trying to attack parliament's most important power, the power to determine budgets, but it was important that national parliaments decided on the budget with awareness of the European impact. He said the Commission was not planning to determine eurozone countries' budgets but if a government were to decide to cut taxes (or increase them), then the Commission wanted the option of assessing the impact of such a decision on other countries.
During the discussions at the ECOFIN Council on Tuesday, Sweden was the first member state to say that further thought was required in the draft peer review legislation. In Sweden, the Riksdag examines budgets in the summer and it would be peculiar for the Commission to makes it analysis of Sweden's budget (in the January to June “European semester”) ahead of the Swedish parliament. Other countries expressed doubts along similar lines, like Poland and the United Kingdom. The new British Chancellor of the Exchequer, George Osborne, pointed out that national parliaments' role was primordial.
On other aspects of the Commission's ideas, several member states recognised the need to for greater efforts to reign in debt under the excessive budget deficit procedures (Sweden and the Netherlands). Macroeconomic imbalances are of crucial concern to the European Central Bank (ECB), which calls for greater attention to be paid to competitiveness gaps. Belgium's finance minister, Didier Reynders, wondered whether some of the Commission's ideas could be brought in immediately. He suggested that making Stability and Growth Pact penalties come into force automatically would be a good idea.
Debate on economic governance will continue on Friday 21 May under the aegis of the president of the European Council, Herman Van Rompuy, in his working group set up upon request from the EU's heads of state. (A.B./transl.fl)