EU could cut funding under budget proposals

IRELAND could lose agriculture, fisheries and regional funding from the EU and be fined, under plans to enforce tight budget rules on governments and force them to adjust spending.

The proposals will see the European Commission vet national budget outlines from next April and introduce a range of indicators designed to give an early warning of potential macro-economic problems in each country.

Economy chief Olli Rehn said that the indicators being planned would have picked up Ireland and Spain’s overheating construction industry and Greece’s spending crisis had they been in force a few years ago.

Described as a “tool-box for stronger economic governance in Europe”, they flesh out the agreement in principle reached by leaders of the EU member states, including Taoiseach Brian Cowen, last month on preventing future economic crises and protecting the euro and they will not require treaty change.

National budgets would be much more coordinated in terms of timing and aims under the proposals. Each January the Commission would report on the economic challenges facing the EU and the euro area and this would be used when assessing whether member states’ budgets and programmes were sufficient.

Ireland will have to bring forward its budget proposals by about eight months so it can present an outline to the EU in April as part of the Stability and Convergence Programmes.

The information to be sent would include an update of the fiscal plans for the current year; a macro-economic scenario underpinning budgetary projections; concrete indications on plans for the following year’s budget; a description of the envisaged policies; and the medium-term budgetary projections for main government variables.

Each country will also submit its National Reform Programme, to be drawn up for the first time this year, indicating progress towards national targets on employment, poverty, research and innovation, education, energy and climate change.


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