Tougher rules are to be introduced for the EU’s most profligate states. After months of delay the European Parliament has finally taken the so called ‘Six Pack’ off ice in a bid to get to grips with the bloc’s debt crisis.
The latest laws aim to provide greater oversight of national fiscal polices. They also re-rewrite the rule book of Europe’s current ‘Growth and Stability Pact’ designed to keep deficits under control. Six Pack supporters in Strasbourg say its the right step.
French Liberal MEP Sylvie Goulard explained: “The idea is not to punish states. That’s not the goal. The aim is to organise things in such a way that economies run better. The thing about this package of rules is when the Commission sees problems arising, it can put pressure on member states to put money aside. That will initially give member states a rate of interest on that money. However, if they fail to correct the underling problem, the account will be transformed into a fine. That means it’s something progress.’‘
Significantly, the new rules make it much harder for member states to ignore warnings from the EU Commission if they fail to keep their budgetary house in order. In effect, it means an automatic warning system, compromising six steps, is in place with costs and consequences for individual countries which fail to take heed.
The power of the Commission could only be ignored if member states in the EU Council were able to cobble together a qualified majority to block it quickly enough. Many MEPs, particularly Greens and Socialists, wanted to temper the new rules, arguing it would lead to too much austerity. Despite such reservations, fear of the current economic climate pushed a lot of lawmakers to back the package.
Portuguese Social Democrat MEP Elisa Ferreira said: ‘‘We’ve finally made it possible to scrutinise budget imbalances, not only when countries run into deficit but also when they accumulate a surplus. I hope this will enable the EU Commission to access the impact on the internal market and the single currency in both the northern and southern economies of Europe.’‘
EU policymakers will hope that by keeping national government spending in check it will also eventually result in less anti-austerity protests of the kind seen in Greece in recent months.
Many analysts, however, admit the so-called ‘Six Pack’ will not be a complete cure for Europe’s current ills. Meaning if the euro is to survive, then much more economic integration will be needed long-term.