The EC presented a set of tools to strengthen the economic governance of the EU. They will include enhanced surveillance based on a "European semester" and will also address macroeconomic imbalances among member states.
The European Commission adopted a Communication outlining a set of tools to strengthen the economic governance of the EU and the Euro area. Its cornerstone is the implementation of enhanced surveillance of fiscal policies, macroeconomic policies and structural reforms. Enhanced surveillance will be based on a "European semester" and comes with an array of sanctions to prevent or correct the excesses that could jeopardize the financial stability of the EU and the Euro area. The Stability and Growth Pact will be reinforced with particular attention given to the evolution of debt, as well as public deficits (more details in the MEMO).
The European Commission President José Manuel Barroso said: "We need to strengthen economic governance in Europe. Although the EU has several instruments for the coordination of economic policy, the crisis has put in evidence that these have not been fully used and that there are certain gaps in the current system of governance. Today, the Commission is putting forward ambitious proposals which will bring concrete progress. Through the ‘European Semester’ we can give coherence to the European monitoring. This is logical and necessary. And through an incentive system that applies sanctions further upstream, we are giving ourselves the tools to act whenever it is necessary. "
The proposals of this "toolkit" are based on three main blocks of reform. Firstly, they call for a synchronization of the European Union surveillance with the national budget procedures in a single framework, the "European semester." Member states must submit their Stability and Convergence Programmes and their National Reform Programmes simultaneously. This will facilitate a better integrated and more effective ex-ante policy co-ordination at the European level. In the second part of the year, this review should guide the drafting of domestic budgets for the following year.
The Stability and Growth Pact should be reinforced both on the preventive and corrective arms. The Commission proposes the requirement for a faster pace of progress towards budgetary balance for countries with high level of debt or pronounced risks in terms of debt developments. The debt criteria should be applied effectively through a clear and simple numerical benchmark for defining a satisfactory pace of debt reduction.
Secondly, beyond budgetary surveillance, the Commission proposes to address the macroeconomic imbalances among member statesthat weaken the cohesion of the EU and in particular the Euro area. Early detection through a scoreboard of indicators together with a more constraining European framework would spur correcting the increasing divergences.
Thirdly, the EU-wide surveillance of structural reforms in member states should ensure that sufficient progress is made in line with the overall goals of the Europe 2020 strategy for a more sustainable and more environmentally friendly growth that is based on knowledge and creates jobs, as adopted at the European Council in June 2010.
© European Commission
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