EU plans to streamline but not change key budget rules

Reuters News
Posted: Nov 28, 2014 5:03 AM

By Jan Strupczewski

BRUSSELS (Reuters) - The European Commission wants to streamline the European Union's complex rules governing economic policy-making, but won't change the two key laws that sharpened budget policy control during the debt crisis, a top official responsible for the euro zone said.

Over the past four years the EU has come up with new ways to coordinate fiscal policy, set limits on borrowing and push for structural reforms to prevent another debt crisis and limit the chances of economic crises originating in Europe in general.

But because the rules were created during a crisis, some of them overlap, some are just for the 18 countries that share the euro only and others for all 28 EU members, some are based on EU law and others on treaties signed between governments.

European Commission Vice President for the Euro Valdis Dombrovskis said he would work to streamline the multiple pieces of legislation and try to transform more of the laws only agreed on between euro zone governments into EU-wide legislation.

"We need to look to some streamlining of procedures that were created during the crisis on an ad-hoc basis -- like streamlining the European Semester," Dombrovskis told Reuters in an interview.

The European Semester is a process under which EU countries agree on economic and fiscal policy priorities for a given year. The Commission makes sure these agreements are then honoured through a series of checks and reviews and monitoring.

At the heart of that complex process are two sets of rules, called the six-pack and the two-pack, which introduce the possibility of swift fines for countries ignoring public deficit and debt limits.

They also give the Commission the right to review draft national budgets and the power to point out to EU countries what might be wrong with their economies in general, with proposed remedies or possible fines.

The two-pack and six-pack laws are up for a review by the middle of December and some policy-makers and economists are concerned that could mean watering them down.

But Dombrovskis, who is in charge of the review, said the Commission had no such plans.

"The Commission at this stage is not offering to amend the six-pack and the two-pack given that it has been a very short time since they have been introduced and that there are a number of things we intend to do within the existing regulation including the streamlining of the European Semester," he said.

"The general assessment is that these regulations have helped strengthen the macroeconomic governance of the euro zone, that they were helpful in restoring financial stability in the crisis and that they allow for a better fiscal and macroeconomic policy coordination," he said.

(Reporting By Jan Strupczewski; editing by Philip Blenkinsop)