A coalition of Northern European states led by the Netherlands (with Denmark, Finland, Ireland, Latvia, Lithuania and Sweden) recalled, on Tuesday 30 April in a policy paper, its positions on the establishment of a fiscal capacity for the euro area to support convergence and competitiveness.
This document echoes the ongoing discussions in the Eurogroup (in inclusive format) on the creation of such an instrument. While last December the Heads of State or Government gave the Finance Ministers of the Twenty-seven (all but the United Kingdom) a mandate to prepare a detailed proposal on this subject for June (see EUROPE 12160/1), several meetings have already enabled the major European financiers to discuss this subject (see EUROPE 12230/4, 12212/10).
This politically sensitive issue suggests significant differences between the various national delegations, particularly between a number of Nordic states opposed to a stabilisation function and permanent transfers, and other states such as Germany, Spain or France, supporting for example the idea of a stabilisation function. It should be recalled that the mandate given to the Eurogroup by European leaders does not include a stabilisation function.
However, this document drawn up by the Northern European Coalition (nicknamed the "Hanseatic League") recalls the main principles to which some States are committed. As a first step, delegations reiterated their commitment to making fiscal capacity an instrument to support convergence and competitiveness, with the stabilisation of economies being ensured, in their view, by the conduct of responsible national policies. In addition, this instrument should aim to "foster both structural reforms and related high quality investments".
In addition, the Hanseatic League States are in favour of co-financing the measures targeted by the Member States, and against cyclical modulations in the contributions or cofinancing rates payable by the States. And access to aid would be conditional on respect for certain "shared values", namely the rule of law, the rules of the Stability and Growth Pact or the macroeconomic imbalance procedure.
The Nordic European delegations also believe that the Eurogroup and/or the Council of the EU should play a key role in decision-making.
On the financing side, the document recommends that the amount to be allocated to this tool should be agreed strictly within the multiannual financial framework (MFF) 2021-2027. Just as the legal framework surrounding budgetary capacity should remain in the MFF here, and not be the subject of an intergovernmental agreement, as envisaged for example in Paris.
In addition, a solution should be found to ensure that Member States that do not participate do not contribute. Moreover, these northern European states do not want new taxes to finance this budgetary capacity.
In their view, this instrument could also include separate components for euro area countries on the one hand and countries that have not adopted the common currency that wish to participate in it on the other. It should also be noted that, as already mentioned, according to these delegations, the expenditure supported in this context could be linked to the euro area's recommendations in the context of the European Semester and the convergence criteria for countries outside the euro area.
Finally, the document recommends that States not participating in budgetary capacity should receive compensation under the revenue side of the MFF.
A further discussion on the subject is planned for the Eurogroup meeting on 16 May.
Link to the document: https://bit.ly/2Lux58u. (Original version in French by Lucas Tripoteau)