The economic governance package = 6 texts For the first time , - PowerPoint PPT Presentation

The economic governance « package » = 6 texts • For the first time , the European Parliament is participating in defining the rules for economic governance of the European Union : • A reform of the Stability and Growth Pact • A new element: control of macroeconomic imbalances • Alignment of national rules on budget adoption • 4 texts in codecision (the Commission makes a proposal / the Council and the Parliament decide on an equal-footing) Sylvie Goulard, MEP, June 2011

Adoption process of the « package» Sept 2010 Commission’s proposals Dec 2010 Mars 2011 Introduction of the 6 reports Adoption of the general in the EP approach in the Council April 2011 Adoption of the reports in Agreement in first ECON committee reading? 23 June 2011 Vote in plenary in the EP Sylvie Goulard, MEP, June 2011 without closing first reading

The EP follows the Commission in its desire to draw lessons from the crisis • More discipline • More economic convergence The EP wants to innovate • More democracy • Eurobonds (common issuance of a part of the sovereign debt of eurozone Member States) Sylvie Goulard, MEP, June 2011

Reinforcing fiscal discipline (1) • Prevention upstream : a decision-making process with less horse-trading  Member States can no longer shy away from their commitments thanks to « reversed » qualified majority = the Commission’s proposal is deemed adopted unless the Council rejects it • Correction downstream : gradual sanctions which are not the objective in themselves Sylvie Goulard, MEP, June 2011

Reinforcing fiscal discipline (2) • Clarification of the debt criteria : • 60% of GDP maximum • Degression rate • « Relevant factors » taken into account, on a case by case basis • Progressive sanctions : • An interest-bearing deposit • A non-interest-bearing deposit • A fine if the Member State still doesn’t take the necessary measures aiming to correct its excessive deficit Sylvie Goulard, MEP, June 2011

Reinforcing fiscal discipline (3) • National rules on budget adoption aligned • A principle of independance of national statistics institutes • Sanctions in case a Member State falsifies the data they send to the EU Sylvie Goulard, MEP, June 2011

Improving macroeconomic convergence (1) • Introduction of a new procedure : • With a list of indicators in order to detect macroeconomic imbalances  Completed with an « economic reading »  Reevaluated with the European Parliament • Using the symmetry principle: all the Member States are under surveillance  Deficits taken into account  Surplus taken into account Sylvie Goulard, MEP, June 2011

Improving macroeconomic convergence (2) • Sanctions only if the Member State doesn’t make efforts • Flexible sanctions : interest-bearing deposit, only then a fine • No sanction for surpluses Sylvie Goulard, MEP, June 2011

Encouraging a cross-border democracy • A transparent « economic dialogue » in the European Parliament is put in place : • With the Member States • Between the European institutions • The « european semester » is included in the legislation: • Dialogue between the European level and the National Parliaments Sylvie Goulard, MEP, June 2011

A step towards Eurobonds • The Commission commits to producing a report before the end of 2011 on Eurobonds , with legislative proposals for: • Joint liability • Limited to a part of the debt • With a liquidity premium to limit the cost for ‘AAA’ countries • The objectives are: • To benefit from the advantages of a global currency • To use the market for a responsible endebtedness Sylvie Goulard, MEP, June 2011

Issues where there is disagreement with the Council Two main issues remain after the ECOFIN meeting on Monday June 20th : • Rejection of the introduction of a reversed qualified majority in the preventive arm of the SGP • Rejection of the symmetry principle regarding macroeconomic imbalances Sylvie Goulard, MEP, June 2011

What’s next ? Focus on the procedure • The legislative resolution hasn’t been voted in plenay: the first-reading is not closed • Now, two solutions :  The European Council (23-24 June) makes a sufficient gesture : vote in plenary in July and first- reading agreement  The European Council stands firm on its position: vote in plenary in July on the EP position and opening of the second-reading Sylvie Goulard, MEP, June 2011