A new crackdown on EU countries failing to run their economies efficiently was described by the European Commission today as “the most comprehensive reinforcement of economic governance since the launch of Economic and Monetary Union”.
A package of Commission proposals to reinforce existing debt and deficit rules includes the right of the Commission to issue automatic fines against member states.
Today’s Commission proposals – which need approval from EU finance ministers - acknowledge that current rules have not worked, with many EU countries way outside the agreed commitment to keep national deficits to below 3% of GDP, and debt within 60% of GDP.
And with many countries struggling with high unemployment and public sector cuts, forcing Treasuries back into line has proved impossible.
But the Commission says it now has the backing of many EU governments who have accepted that the recent economic crisis requires tougher measures, not least in the wake of the Greek economic downturn which threatened the very existence of the euro.
Germany is firmly behind today’s proposals – but France is bitterly opposed.
A Commission statement today said: “These policy proposals underline the Commission’s strong will to proceed diligently with the necessary reforms.”
Critics interpret that this is, in effect, a takeover of economic governance from Brussels – although UK Chancellor George Osborne has already successfully negotiated the right not to submit details of Government Budget plans to the Commission before presenting them to MPs at Westminster.