Attack budget rule-breakers where it hurts the most: their wallets. Under proposals by the European Commission, European Union governments would lose EU aid funding if they fail to enforce the bloc’s deficit and debt rules. This could see subsidies for agriculture, fishing or poor regions cut, as Brussels sets a more serious tone.
EU Commissioner for Economic and Monetary Affairs Olli Rehn said: “We are reinforcing economic governance, we are reinforcing economic policy coordination, and preventive budgetary surveillance.”
The move to sharper discipline will now be studied by EU finance ministers. Although the tools are not new, excessive deficit procedure has never been vigorously applied.
Karel Lannoo, with the Centre for European Policy Studies, said: “We already saw before 2004 that the implementation of the sanctions, which were at that time foreseen in the Growth and Stability Pact, raised some problems, and could have been implemented already earlier, but the Commission refrained, and delayed decisions.”
The proposals by the EU executive are part of the bloc’s efforts to prevent another sovereign debt crisis like the one triggered by years of overspending by Greece and its faulty statistics.