Brussels, 12 May 2010
Mastering economic interdependence: Commission proposes reinforced economic governance in the EU
The recent crises and the risk for the stability of the euro area have underlined vividly the interdependence and exposed the vulnerability of Member States, in particular inside the euro area. The European Union and Member States have taken coordinated and determined action: This included not only short-term measures to stabilise the financial sector, revitalise the economy or ensure the solvency of Greece and the stability of the Eurozone, but it also entailed the setting up of a medium- and long-term vision to put Europe on the path of smart, sustainable and inclusive growth ("Europe 2020"). Now the time has come also to draw far-reaching lessons concerning the way economic policies are dealt with. Therefore, the Commission proposes to reinforce decisively the economic governance in the European Union. The aim of the Communication is to strengthen the functioning of the Stability and Growth Pact and extend surveillance to macro-economic imbalances. It proposes to align national budget and policy planning through the establishment of a "European Semester" for economic policy coordination, so that Member States would benefit from early coordination at European level as they prepare their national budgets and national reform programmes. Finally, the Commission considers it to be a first priority to make the European stabilisation mechanism decided by ECOFIN 9 May fully operational. Based on this experience, the Commission intends in the medium-to-long term make a proposal for a permanent crisis resolution mechanism.
President Barroso said: "Europe has dealt with the immediate emergency. Today, the Commission sets out what we need to do to strengthen Europe's economic governance. By reinforcing the SGP, by addressing the macro-economic imbalances and establishing a robust crisis management framework, we have the core ingredients for a Consolidation Pact for a strong European economy. I am confident that Member States are determined to follow suit on our proposals to reduce the risks resulting from our interdependence for the benefit of our citizens and demonstrate our willingness to protect the euro as a most important asset of the EU."
Commissioner Rehn said: "Coordination of fiscal policy has to be conducted in advance, in order to ensure that national budgets are consistent with the European dimension, that they don't put at risk the stability of the other member states. This can be done in the framework of a European economic semester. For euro-area it means deeper and broader surveillance, in particular with regard to macroeconomic imbalances."
The different elements of the Commission's Communication are:
Given the severity of the crisis, the Commission considers it important to make swift progress on the reform agenda laid out in this Communication. Follow-up work will include the preparation of legislative proposals to amend the regulations underpinning the Stability and Growth Pact, to enhance the prevention and correction of macroeconomic imbalances within the euro area, and to work towards a permanent crisis resolution mechanism. The first European Semester should start with the beginning of 2011.
The financial and economic crisis - a chronological overview - May 2010
EMU@10 - Successes and challenges after 10 years of Economic and Monetary Union, European Economy, No. 2, June 2008: