FINANCE Ministers have agreed to a list of new rules for national budgets that will herald what Minister of State, Martin Mansergh, described as a “new era” for economic policy.
The issue of whether to spend money to stimulate the economy or consolidate by cutting back on government spending and debt would be decided among EU finance ministers in the future, he acknowledged.
“It’s not viable for us to go against the tide and all parties have to take account of that fact and those parameters. I am not sure to what extent that realisation has hit home,” he said.
The Government would have to put forward their economic policy for the next four to five years and while the EU would not require to know whether VAT was being raised or lowered, they would need the broad thrust of government budget plans, he said.
The stronger Stability and Growth Pact rules will see the Government bringing forward the outline for the 2012 budget by eight months as all EU governments submit their budget plans by April next year.
This will be reviewed and approved by EU ministers before the details are fleshed out and presented to national parliaments for approval.
The measures, including sanctions such as loss of EU funds, are due to be adopted finally in the autumn.
The ministers also moved forward on plans for three EU-wide agencies to police the financial industry.
Britain had severe reservations with the plans, which were tightened up considerably by the European Parliament last week, in case they interfered with the City of London. Afterwards, British chancellor of the exchequer, George Osborne, said they had made progress.
“The power of the European agencies are focused on areas where there is dispute about a point of law, rather than allowing them to become involved in day-to-day supervision or second guessing the discretion of national supervisors.”
Meanwhile, the Department of Finance has said its support of EU plans to scrutinise national budgets cannot be taken for granted.
Its assistant secretary, Michael McGrath, said while the push for greater cooperation between eurozone countries was welcome it could not happen at the price of independence.
Mr McGrath was speaking at an Oireachtas committee on European affairs.
Mary McCarthy, economic advisor to the European Commission, also attended and said positions on the scrutiny situation would be clarified in September.
She said the measures would offer the opportunity to predict trends in spending and give a scorecard for each member state early in the budget cycle.
This would be used as a “carrot and stick” to punish countries who exceeded debt and deficit limits.
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