THE Government will submit the broad outlines of next year’s budget to the EU for approval for the first time next April, ahead of the Oireachtas seeing it.
However, EU finance ministers still have to agree if and how to punish countries that fail to make changes recommended by the Commission and the European Central Bank.
The new system means the budgets of all EU member states will be aligned for the first time ever to achieve specific targets including on education, employment and no budget over-runs of more than 3%.
It’s an attempt to protect the euro and rein in countries that have run up big budget deficits, Ireland is expected to top the league next year at over 20%.
Finance Minister Brian Lenihan said Ireland had no problem accepting the changes and stressed that the Oireachtas would have the final say on the budget and national sovereignty would not be affected.
“What we will send to the Commission is the broad outlines – the Dáil will approve the details as usual,” he said. The department will have to bring forward the work on the budget by six months to meet the new European semester.
The new cycle will begin in January when the Commission will present an annual growth survey, reviewing economic challenges for the EU and the euro area.
Member states will submit their stability and convergence programmes that include broad budgetary outlines, and their national reform programmes in April. The Commission and the ECB will examine these and ensure rules are observed.
If any country’s budget is out of line, they can issue what they are calling “policy guidance” in June or July.
The Commission wants criteria to include limits on national debt and onsemi-automatic sanctions for countries that fail to incorporate the policy.
Economic Commissioner Olli Rehn said he will propose legislation at the end of the month that will include more effective incentives and sanctions and that it would take a majority of countries to overturn recommendations to make budget changes.
At the moment the proposals are to fine errant countries, withhold or withdraw EU finance and to withdraw voting rights. This latter would need a treaty change, which few are in favour of, while quite a number of countries are against fining or withdrawing funds.
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