The European Commission still hopes to meet a June deadline to sign off a package of reforms it says mark a major step forward in stemming overheating economies and curbing spendthrift budgetary policies. The rule changes proposed under the Commission’s package are seen as essential to prove to increasingly wary financial markets that the EU is capable of solving the sovereign debt crisis.
Malta is, in principle, in agreement with the package of new rules. However, the deadline for finalising the legislation, which was first published last September, has been thrown into doubt following disagreements with the European Parliament.
MEPs in the Committee on Economic and Monetary Affairs, which is responsible for drawing up Parliament’s position on the six texts in the package, are holding out for an agreement that would introduce more reverse majority voting, forcing member states to garner a majority of countries on their side in order to overturn Commission decisions.
MEPs also want more influence over a scoreboard to monitor potential future bubbles in EU economies, and are looking to enshrine in EU law a new semester for handing in national fiscal and economic plans to the Commission.
A tentative plenary vote is scheduled for the European Parliament’s June plenary, although meetings are still taking place between the Parliament and Council in an effort to overcome the impasse. Economic Affairs Commissioner Olli Rehn and Hungarian Finance Minister György Matolcsy will meet MEPs next week in Strasbourg to go over the remaining issues.
The renewed push to get the reforms signed off on time is being made the week before the Commission releases a series of recommendations under the ‘European semester’, flagging the progress and shortcomings of each member state in meeting the EU’s fiscal and economic targets.
The EU’s leaders are expected to give a final approval to the proposals in June, as well as agreeing the necessary Treaty changes to create a permanent EU bailout fund.
In a nutshell, economic governance consists of the following:
Budgets: An overhaul of the Stability and Growth Pact to ensure punishments for crossing debt and deficit thresholds are meted out more swiftly.
Economic policies: Priorities set by the Commission will be monitored under a new imbalances scoreboard, with fines for countries that fail to address errant policies.
Bailouts: The EU’s two bailout funds – the European Financial Stability Facility (backed by eurozone governments) and the European Financial Stability Mechanism – are to expire in 2013 and be replaced by the permanent European Stability Mechanism. The Lisbon Treaty is being amended to ensure the fund has a legal basis
European semester: The new six-month timeframe during which governments will have to hand in their budgetary and economic plans for Commission and Council scrutiny (runs from January to June).