Tough talks ahead on new budget discipline rules
By Sarah Collins | Monday 09 July 2012
The member states’ finance ministers have already set the scene for tough talks with MEPs on twin proposals to tighten budget discipline for deficit and stressed states, saying that some of the changes proposed by the European Parliament are legally questionable. A first three-way meeting between the Commission, Parliament and Council is due to take place on 11 July on proposals known as the ‘two pack’ (COM(2011)819 and 821), which were first published by the Commission last November.
“Some of Parliament’s proposals raise fundamental legal questions,” said a senior EU official, on condition of anonymity. Of particular concern for finance ministers is a proposal by French rapporteur Jean-Paul Gauzès (EPP) to offer legal protection to defaulting states, while Socialist and ALDE deputies are standing behind a suggestion to create a redemption fund to help roll over up to €2.3 trillion worth of national debt for countries facing difficulties borrowing on the markets. The proposals were approved by a large majority of MEPs in a plenary vote, on 13 June - the vote did not close the door on a first-reading agreement as MEPs failed to vote on the final legislative resolution.
The ‘two pack’ is the second major overhaul of budgetary rules in the last two years, designed to offer creditor states assurances that their backing for multiple eurozone bailouts - Cyprus recently became the fifth eurozone state to seek a rescue loan - would not be frittered away by reckless spending in debtor countries. The rules are seen as an essential step in creating a true fiscal, banking and political union - an aim agreed upon by EU leaders at their June summit.