Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

No strategy and a beige suit

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014

Read more

ENCORE!

Alain Choquette: A Hilarious Magician in Paris

Read more

FOCUS

France welcomes Iraqi Christian refugees

Read more

FRANCE IN FOCUS

Emmanuel Macron: A new economy minister with a pro-business agenda

Read more

THE OBSERVERS

More of this year's best Observers stories

Read more

#TECH 24

Changing the world, one video game at a time

Read more

IN THE PAPERS

Socialist Party summer conference kicks off in explosive atmosphere

Read more

  • Exclusive: Fabius warns of further sanctions against Russia

    Read more

  • Experimental Ebola drug ‘ZMapp’ heals all monkeys in study

    Read more

  • British killer escapes from French psychiatric hospital

    Read more

  • Ukraine to relaunch NATO membership bid

    Read more

  • Police hunt for British boy with brain tumour taken to France

    Read more

  • Chelsea’s Torres set for AC Milan switch

    Read more

  • France shines in IMF list of world’s promising economists

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

  • First case of Ebola confirmed in Senegal

    Read more

  • Obama has 'no strategy yet' on potential Syria strikes

    Read more

  • Netflix to woo French with ‘House of Cards’ set in Marseille

    Read more

  • French businesses ‘hoping for a new Thatcher’

    Read more

  • Syrian refugees surpass 3 million, UN says

    Read more

  • West backs Ukrainian claims of Russian incursion

    Read more

  • Libyan PM resigns as Islamists set up rival administration

    Read more

  • UN says 43 peacekeepers captured in Golan Heights

    Read more

  • The deleted tweets of Manuel Valls

    Read more

  • Peru seizes record 6.5 tonnes of Europe-bound cocaine

    Read more

  • Pakistan army to mediate between PM, protesters

    Read more

  • In pictures: Billions of locusts invade Madagascan capital

    Read more

Europe

Commission to seek tougher budget rules for eurozone nations

Text by News Wires

Latest update : 2010-05-12

The EU Commission on Wednesday will propose stricter rules for limiting public deficits and debt for the national budgets of the 16-nation eurozone, with stiffer penalties for budgetary infractions.

AFP - In the latest move to bolster the troubled eurozone, the EU Commission will on Wednesday propose much stricter control of national budgets, with tougher penalties for fiscal indiscipline.
   
The commission, guardian of EU rules, will present its long-awaited plans for improving economic policy coordination and budgetary surveillance in the 16-nation eurozone.
   
Its prime target is to tighten up the bloc's Stability and Growth pact which sets limits for member states' public deficits and debt -- limits which are currently widely ignored as Europe struggles to emerge from the worst recession since World War II.
   
The commission wants to improve the pact's "preventative surveillance" role, reinforcing controls on national budgets, EU Economic Affairs Commissioner Olli Rehn said in the French daily Les Echos on Tuesday.
   
"It is better to create a fire brigade before the fire," he told a Finnish business paper on Monday.
   
One of the controversial main planks of the proposals is that national budgets would be examined by all 16 eurozone finance ministers who would give the green light, or not, before the plans are put to national parliaments.
   
"This is at the heart of our proposal -- a measure that we consider absolutely necessary if we want to reinfoce the economic and monetary union," Rehn told Les Echos.
   
The likes of Britain, where such a scheme would be anathema, are not affected as it would only apply to those countries which use the common euro currency.
   
However, when Rehn presented the bones of his idea to finance ministers last month, it also met with resistance from Germany, the biggest economy in Europe.
   
Joerg Asmussen, state secretary at Germany's finance ministry, stressed that any new system must not impinge on the "national prerogative in budgetary matters."
   
Little appears to have changed since then but Rehn is making positive noises.
   
"We don't want to discuss each line of a German budget," he says in comments to appear in the German daily Die Zeit on Wednesday.
   
On top of the beefed-up rules, Brussels is looking for beefed-up penalties.
   
Berlin has proposed that fiscal miscreants should forfeit certain European subsidies or voting rights at relevant EU ministerial meets.
   
The commission is considering the first option, according to an EU source, holding out the possibility of all handouts being at risk, including from the huge farming subsidies programme.
   
The current stability pact rules limit national budget deficits to three percent of Gross Domestic Product, with the threat of fines -- which have never been imposed -- for those straying above that ceiling.
   
Total debt levels should stay under 60 percent, a level which is a mere pipe dream for most EU nations who are looking to Monday's 750 billion euro (one trillion dollars) rescue package for the euro to help them through the crisis.
   
The difficulty in getting the finance ministers to effectively fine their own governments has led Brussels to consider introducing automatic triggers, leading to penalties if remedial action is not taken quickly enough when fiscal rules are breached, the European source said,.
   
"I prefer prevention to penalties ... but we must also plan for the worst.
   
"We must better encourage virtuous nations but also envisage penalties for those who don't play by the rules," Rehn told Les Echos, while ruling out the possibility of kicking a recalcitrant nation out of the eurozone altogether, an option only recently put forward by Berlin.
   
The commission is also looking at enlarging economic surveillance beyond the policing of debt and budget deficits.
   
We must "tackle the problem of macroeconomic imbalances," notably as regards competitiveness, said Rehn, adding: "We will come up with concrete proposals to create new indicators in this area."
   
Brussels also wants to set up a permanent crisis management mechanism, following on from Monday's massive rescue package which has a three-year lifespan.
  
 

Date created : 2010-05-12

COMMENT(S)