On Wednesday 2 May, the European Commission suggested creating two new budgetary instruments aiming to reinforce stability and economic convergence within the Economic and Monetary Union (EMU), when presenting its proposals for the multiannual financial framework 2021-2027 (see other article).
These two instruments - a structural reform support instrument and an investment stabilisation function (see EUROPE 12012) - echo the European Commission's proposals of December 2017 aiming to deepen the EMU (see EUROPE 11920).
The President of the European Commission, Jean-Claude Juncker, told members of the European Parliament meeting for a mini plenary session in Brussels that the two instruments go hand in hand. They aim to prevent crises and do more to remedy them if required, he added.
The Eurozone summit of next June, which is hoped to result in the creation of a roadmap for the EMU, will provide the heads of state or government with the opportunity to discuss the budgetary mechanisms under consideration.
Support for structural reforms. The structural reform support instrument, which will have an envelope of €25 billion, will consist of two tools, the respective budgets of which have not yet been clarified.
The first tool will provide financial support to member states implementing structural reforms in their economy. These measures will have been the subject of dialogue between the member states and the Commission, on the basis of the country-by-country recommendations presented by the European institutions in the framework of the 'European Semester' budgetary process. Once these measures have been set in place, the member states will receive the financial support in question.
This instrument will have a modest envelope reserved for non-Eurozone countries wishing to adopt the single currency by this specific convergence mechanism.
In the framework of these two programmes, technical support may be provided by the Commission to the national authorities, on the basis of the experience of the structural reform support service, which has so far advised more than 440 projects in 24 member states.
Stabilisation function. The second proposed budgetary instrument aims to ride out asymmetric economic shocks affecting some member states across the European Union, to help these countries maintain their public investments.
Whereas French President Emmanuel Macron, takes the view that this instrument should be specific to the Eurozone (see EUROPE 11988), the institution proposes opening it up to all member states wishing to participate financially in it, although it is mainly aimed at the Eurozone.
The support will take the form of loans underwritten by the EU budget, to a level of €30 billion. Financial aid will furthermore be available to the member states to cover the costs of the interest on these loans.
The Commission hopes that this instrument, which will come in addition to national and EU tools, may be triggered automatically if specific conditions are met and socio-economic criteria are complied with.
InvestEU investment fund. Based on the success of the European Fund for Strategic Investments (EFSI), the financial arm of the 'Juncker' investment plan, the Commission calls for the creation of a new investment fund, InvestEU.
This will centralise all financial instruments managed by the European Union. The institution suggests that the ad hoc contribution of the EU budget stand at €15.2 billion. The EU budget would thus act as a financial guarantee, aiming to draw down nearly €650 billion in private investments.
Again, technical support will be available to beneficiaries of the programme. (Original version in French by Lucas Tripoteau)