Over an informal breakfast during the Ecofin Council session in Luxembourg on Tuesday 10 October, the finance ministers of the EU expressed their differences of opinion over the margin available to the European Commission to assess the structural efforts each member state must make in the framework of the preventative arm of the Stability and Growth Pact.
Under the rules of the pact, once it has joined the preventative arm (public deficit of less than 3% of GDP in nominal terms) a member state must reduce its structural deficit by 0.5% of GDP a year if its public debt is below 60% of GDP if it is in an negative economic cycle, and by 0.6% of GDP a year if its public debt is above 60% of GDP and it is in a positive economic cycle.
However, in addition to the flexibility already provided for by the Pact, the Commission may make a suggestion to the Council, in the framework of its country-specific recommendations, to grant additional discrepancy margin, the quantitative appreciation of which is discretionary.
This discretionary appreciation has been criticised by certain member states who made this known during the informal discussion. The Netherlands, Germany, Sweden, Slovakia, Austria, the Czech Republic, Lithuania and Luxembourg all called for a strict application of the rules of the pact which would, they argue, promote transparency.
Spain, for its part, took a more moderate position, stating that it was necessary to look at the methodology used by the Commission to determine the discrepancy margin.
In the opposite corner, certain member states agree with the Commission's current position. They came out in favour of giving the institution discretionary powers in the assessment of the discrepancy margin, which would make it possible to show pragmatism and take account of the specific economic situation of each country.
Despite these differences of opinion, the ministers agreed on the need for multilateral budgetary transparency, credibility and predictability in the Eurozone.
At the conclusion of this discussion, Thomas Wieser, the President of the Economic and Financial Committee of the Council, suggested that simplifying the budgetary surveillance framework be considered as part of the Commission's proposals on deepening Economic and Monetary Union (EMU), to be unveiled on 6 December of this year. (Original version in French by Lucas Tripoteau)