Eurozone finance ministers will this evening (17 May) attempt to agree a major strengthening of economic governance in the single currency bloc, in an effort to convince markets of their determination to beat the debt crisis.
Ministers will discuss a package of governance reforms presented last week by the European Commission. They include that the Commission and finance ministers should scrutinise countries’ draft budgets before they are submitted to their national parliaments, and that member states that pursue irresponsible fiscal policies should be hit with sanctions. These would include a suspension of EU structural funding, and having to place a non interest-bearing deposit with the Commission.
The rules limit government deficits to three percent of GDP and debt levels to 60 percent of GDP, but both ceilings have been ignored by a majority of EU states in recent years. But the commission proposals, set to be discussed by EU finance ministers this week, have already drawn criticism from politicians concerned that they would result in a watering down of the budget-agreeing role of national parliaments.
Germany is among those keen to see the bloc’s rules on spending stepped up. Last year, the country enshrined in its constitution a law forbidding the federal government from running a deficit of more than 0.35 per cent of GDP by 2016. German finance minister Wolfgang Schaeuble is reported to be working on plans that would see other eurozone countries adopt similar laws, and may present them to ministers as soon as this Monday, reports German weekly Der Spiegel.