ELEC: European Economic Governance revisited

05 July 2004

The European League for Economic Cooperation (ELEC) expressed its concern and makes suggestions for a stronger and more consistent framework of economic governance in Europe. The new 'Cahier Boël' argues that the experience of the last five years, as well as the added challenge of the enlargement of the European Union, call for a substantial strengthening of the economic governance of the EMU, as well as of the European Union as a whole. Not only has the economic performance of the euro area been disappointing but the co-ordination process has failed to work as initially intended.

For monetary policy decisions ELEC argues that except for the priority attached to price stability, it would be desirable that the procedure for amending the Treaty provisions for monetary governance be exempted from the requirement of unanimity in the Council.

The provisions of the Stability and Growth Pact (SGP) should be reviewed from time to time. It would be desirable to move from a framework of 'may or may not' type of provisions for individual countries to a more mature collective management of the fiscal stance in the euro area.

To strengthen the economic governance, ELEC also proposes further institutional changes. The European Commission should have broad powers of initiative and implementation, the Eurogroup should be upgraded into a restricted Council endowed with the ability to adopt decisions on the proposal of the Commission, and the European Parliament should be involved in the process of drawing up the Broad Economic Policy Guidelines.

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