27 November 2014

European Commission: The EU's economic governance explained

Surveillance systems have been strengthened for budgetary and economic policies and a new budgetary timeline for the euro area has been introduced.

The rules (introduced through the so-called "Six Pack", the "Two Pack" laws and the Treaty on Stability, Coordination and Governance) are grounded in the European Semester, the EU's economic policy coordination calendar. This integrated system ensures that there are clearer rules, better coordination of national policies throughout the year, regular follow-ups and the possibility of swifter sanctions for non-compliance. This helps Member States to deliver on their budgetary and reform commitments, while making the Economic and Monetary Union more robust.

The following are the essential features of the system:

COORDINATION THROUGHOUT THE YEAR: THE EUROPEAN SEMESTER

Before the crisis, budgetary and economic policy planning in the EU took place through different processes. There was effectively no comprehensive overview of the efforts made at national level, and little opportunity for Member States to discuss a collective strategy for the EU economy.

Coordination and guidance 

The European Semester, introduced in 2010, ensures that Member States discuss their budgetary and economic plans with their EU partners at specific times throughout the year. This allows them to comment on each other's plans and enables the Commission to give policy guidance before Member States adopt final decisions. The Commission also monitors whether Member States are working towards the jobs, education, innovation, climate and poverty reduction targets of the EU's long-term growth strategy, ‘Europe 2020’.

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A DEEPER ECONOMIC AND MONETARY UNION

The reforms undertaken in recent years are unprecedented, but the crisis has demonstrated how much the interdependence of our economies has increased since the foundation of the Economic and Monetary Union. A Deeper and Fairer Economic and Monetary Union is one of the top priorities of the Juncker Commission as detailed in its Political Guidelines. This means continuing the reform of the Economic and Monetary Union to preserve the stability of the single currency and to enhance the convergence of economic, fiscal and labour market policies between the Member States that share the single currency.

At the last Eurozone Summit on 24 October, the Commission was invited to develop, in cooperation with Member States, concrete mechanisms for stronger economic policy coordination, convergence and solidarity. The Eurozone Summit invited the President of the Commission, in close cooperation with the President of the Euro Summit, the President of the Eurogroup and the President of the European Central Bank, to prepare next steps on better economic governance in the euro area. President Juncker has announced that he will present to the December European Council how he intends to take forward the work on the basis of the Commission's Blueprint for a Deep and Genuine Economic and Monetary Union, published on 28 November 2012. This will be the basis for launching further legislative and non-legislative initiatives to deepen the Economic and Monetary Union.

Full press release

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