Brussels, 14/01/2004 (Agence Europe) - On Tuesday in Strasbourg the European Commission adopted a three fold policy to improve co-ordination of economic policies, following the Ecofin conclusions on 25 November on the French and German deficits (also EUROPE yesterday p 6). As well as its decision to oppose the conclusion at the Court of Justice, the Commission came out in favour of the two major "axis" mentioned last week by Pedro Solbes, Commissioner or economic and monetary affairs. First of all, the Commission will continue to exercise a role in monitoring economic and budgetary policies in all Member States as part of the treaty on the stability and growth pact, which will obviously include monitoring of developments in countries displaying excessive deficits. Based on the experience acquired during the first five years of EMU's existence, the Commission also confirmed that in February is would submit new proposals to strengthen economic governance covering improved implementation of the pact.
In connection with economic monitoring, the Commission pointed out on Tuesday that last week it began to assess the most recent updates of the stability and convergence programmes and adopt recommendations for opinions on the programmes. three series of evaluations will be carried out. The Commission confirmed that the next one would take place on 28 January in time for the Ecofin council on 10 February and the following council on 18 of the same month and on 9 March. It will also ensure the follow up to the implementation of the Council's conclusions on France and Germany. Following the communication in March 2004 and the budgetary results of 2003, the Commission will work out whether it will be suitable to continue or cancel the procedures on excessive deficit currently being carried out (for Portugal, Germany and France) and to apply procedures from the pact for other Member States. As well as budgetary monitoring, the Commission also intends to push forward the Union's economic programme by adopting its spring report in the next few weeks, where it will list the EU's economic priorities "in an effort to take advantage of the nascent recovery and implement the Lisbon strategy. The Commission underlines that the ultimate objective of economic governance is to strengthen growth and create jobs, "its spring report will play an essential role". In this context, it will also present the report on implementation of the Broad Economic Guidelines (BEPG) for 2003.
Observing that procedure on excessive deficits has not been correctly applied and that the BEPG over previous years and Lisbon objectives have not always been respected, the Commission has therefore decided to present a new initiative for improving the framework f EU economic governance in February. This initiative will be backed up by the existing treaty and the draft constitution but could, according to the European Executive, "involve amendments to the rules making up the pact". The right balance has to be found between, on the one hand, the need to keep the economic governance framework stable and predictable and, on the other, to improve the system on the basis of experience. The key elements agreed by the College to be addressed in this Communication are: (i) the need to better combine discipline with economic growth considerations by placing fiscal policy within the broader context of general economic policy surveillance; (ii), the need to focus more on the sustainability of the member states' public finances, (iii), the need to improve implementation by enhancing the common interest in the area of economic policy. On the first aspect, there is a need to find a new balance between the Broad Economic Policy Guidelines and the Stability and Growth Pact as instruments to co-ordinate economic policy. On the second, there is a need to combine stricter discipline with flexibility in the conduct of national budgetary policies. This can be achieved by, among other things, (i) putting more emphasis on public debt and sustainability, (ii) being particularly strict at the time when the economy is booming and thereby applying more symmetry in budgetary surveillance over the economic cycle, (iii) making more allowance for country-specific differences without putting at risk the equal treatment principle, and (iv) by setting principles for prescribing the budgetary adjustment path and ensuring stronger enforcement.