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Since the launch of the euro, clear rules to ensure sound public finances have been in place in the form of the Stability and Growth Pact (SGP), which sets the well-known limits for budget deficits and public debt of 3 per cent and 60 per cent of GDP, respectively. However, the global economic and financial crises exposed shortcomings in economic governance and budgetary surveillance at the EU level. These shortcomings were effectively addressed with the creation in 2010-2011 of the European Semester of economic policy coordination and the six legislative proposals known as the 'Six-Pack', which strengthened the SGP in a number of ways.
However, given the higher potential for spillover effects of budgetary policies in a common currency area, there is a clear need for still stronger mechanisms specifically for the euro area. To address this need, in November 2011 the Commission proposed two further Regulations to strengthen euro area budgetary surveillance.
This reform package, the so-called 'Two-Pack', enters into force on 30th May 2013 in all euro area Member States. The new measures mean increased transparency on their budgetary decisions, stronger coordination in the euro area starting with the 2014 budgetary cycle, and the recognition of the special needs of euro area Member States under severe financial pressure. The entry into force of the Two-Pack also paves the way for further steps to be taken to reinforce the Economic and Monetary Union, as set out by the Commission in its ‘Blueprint for a Deep and Genuine EMU’ published last November (see IP/12/1272; MEMO/12/909).
See full press release for Q&A