Brussels, 20 March 2013
Commission sets out next steps towards a deep and genuine Economic and Monetary Union
Today, the European Commission presented two new Communications on the next steps towards a deep and genuine Economic and Monetary Union (EMU). The aim is to strengthen economic policy coordination and integration in the euro area. These Communications follow commitments made in the Commission's Blueprint for a Deep and Genuine Economic and Monetary Union last November, and respond to calls from the European Council to take work forward on these two fronts.
The Communication on the ex-ante coordination of plans for major economic policy reforms contains options on how to organise EU-level discussions on large-scale economic policy reforms in the Member States before final decisions are taken at national level. The reasoning behind this is to properly take into account any positive or negative spillovers of the reforms on other euro area countries early on in the decision-making process.
The Communication on a Convergence and Competitiveness Instrument (CCI) sets out options for two instruments: contractual arrangements for Member States to undertake specific reforms and financial support to help Member States implement these reforms. These two new instruments complement the structures that already exist for the surveillance of budgetary and economic policy at EU level, which have been enhanced through the European Semester, Six Pack and Two Pack reforms.
President Barroso said: "With these two Communications, the Commission is driving forward the integration process, as we set out in our Blueprint on a Deep and Genuine EMU last November. These proposals – in particular the Convergence and Competitiveness Instrument - combine the need for more discipline at national level with more solidarity at EU level. They underpin the strength of the common currency and will help drive forward Europe's competitiveness, growth and job creation."
Olli Rehn, Vice-President for Economic and Monetary Affairs and the Euro, said: "With these two Communications, the Commission is building on the major steps forward taken in budgetary policy coordination, by enhancing the framework for better coordinated structural reforms. Our aim is very clear: to help Member States design, decide and implement better, earlier and faster reforms for growth, competitiveness and job creation."
The Commission is presenting these Communications just four months after the Blueprint was published, kicking off a step-by-step reform drive that will underpin the strength of the Economic and Monetary Union and ensure that future crises can be better contained. The proposals are fully in line with the Commission's economic strategy, which pursues smart fiscal consolidation together with growth-enhancing reforms that can help to open up new job opportunities in Europe.
Reforms, or the lack of reforms, can have significant spillover effects on other Member States, particularly in the euro area. Well-designed labour or product market reforms can, for example, boost growth and job creation in the Member States concerned, thereby increasing demand for products and services from other Member States. At the same time, the lack of these reforms can leave Member States vulnerable to external economic shocks, which can then spill over to other Member States, as occurred during the crisis. In order to maximise positive spillovers and minimise negative ones, the Commission is considering proposing that the reforms to be coordinated should focus on competitiveness, employment, the functioning of product and services markets, network industries, tax systems, financial stability and fiscal sustainability. The discussion of the reforms would be firmly anchored in the European Semester process.
Discipline and solidarity
A Convergence and Competitiveness Instrument for the euro area would combine contractual arrangements laying down the key measures a Member State commits to put in place with agreed timelines. The measures would be designed to implement the Country Specific Recommendations agreed as part of the European Semester, in particular those emanating from the Macroeconomic Imbalances Procedure. As a complement to these reforms, a financial instrument could be created, in principle within the EU budget but outside the ceilings set in the MFF, to promote and support the reforms when an individual Member State is under stress. The ambitious and timely implementation of structural reforms will go a long way to addressing key weaknesses in the economy, especially in those areas related to competitiveness.
This would support the rebalancing, adjustment and growth of the euro area economies and would serve as a first step towards a stronger fiscal capacity – which would entail more deeply integrated economic policies.
The Commission will also examine ways for Member States that are not part of the euro area, and in particular those preparing for euro accession, to enter a contractual arrangement.
Background and next steps
Last June, the European Council invited its President, in close collaboration with the Presidents of the Commission, the Eurogroup and the European Central Bank, to present a specific and time-bound roadmap for the achievement of a genuine EMU.
On 28 November 2012, the European Commission adopted a Blueprint for a deep and genuine Economic and Monetary Union, which set out a vision for a strong and stable architecture in the financial, fiscal, economic and political domains. It set out incremental steps to achieve this to be taken in the short, medium and longer term.
Amongst the short-term measures were the coordination of plans for major economic policy reforms and the introduction of a Competitiveness and Convergence Instrument, which the two Communications presented on the 20th March have taken forward.
The future of the EMU will be discussed again at the European Council in June, which will decide on concrete measures and a time-bound roadmap.
MEMO/13/259 Next steps towards a deep and genuine Economic and Monetary Union: Early co-ordination and contractual arrangements
Communications on the ex-ante coordination of plans for major economic policy reforms and on the introduction of a Convergence and Competitiveness Instrument