A good package

The multi-purpose package of measures proposed by the government is finally ready. Its targets include the achievement of greater economic governance in Europe, monitoring State budgets, stabilizing currency and the markets thus preventing future crises and stepping up competitiveness and job placement. Opportunities and limits. European Parliament and Council will examine the Executive’s proposals, released September 29 after months of analyses and debates, prior to adoption. However, two limitations have already emerged. Firstly, the provisions will be effective only in 16-Member-State euro area; secondly, while until now the measures were supposed to be enforced in January, their adoption has been postponed to June 2011. The legislative package – one directive and 5 regulations – is made up of budget proposals, including “a wide-ranging reform of the Stability and Growth Pact (SGP)”, while “two new regulations aim at detecting and addressing effectively emerging macroeconomic imbalances within the EU and the euro area”. The executive admits, “changes will give teeth to enforcement mechanism and limit discretion in the application of sanctions for Member States of the euro area”. Due to the impact of the U.S financial crisis on European businesses and employment, the EU Commission will prevent similar situations from happening again by adopting “sound economic policies, thereby contributing to more sustainable growth and jobs, in line with the Europe 2020 strategy”.The stand of Barroso and Rehn. “The strikes by workers across Europe today remind us that we must not leave behind those most in need. Essential public services must be protected”, said EU Commission president José Manuel Barroso. In fact, on September 29 strikes took place across Europe, while the European Trade Union Confederation staged a major anti-austerity march in Brussels. “This is not to tick the box but to make sure corrective action is taken. The message is clear – we will pull the hand break before the car rolls down the hill”. The Commission is set to “deepen the governance system to deal with macroeconomic imbalances”, with a new Stability and Growth Pact that will step up economic governance at national level. “The proposals align with Lisbon Treaty obligations” ratified by EU Member States, said Economic and Financial Affairs Commissioner Olli Rehn. The Executive’s Regulation provides for “prevention and economic surveillance and correction of macroeconomic imbalances. The intention is to implement the Stability and Growth Pact to correct excessive public deficit which represents a heavy burden on citizens”. For Rehn, the “financial sanctions stipulated in the Pact can, and should be, imposed and respected by everyone”.Six measures. In detail, the first of the six measures is a regulation amending the legislative underpinning of the “preventive part” of the Stability and Growth Pact, which is meant to ensure that “EU Member States follow prudent fiscal policies in good times to build up the necessary buffer for bad times”. The second proposal is a regulation underpinning the “corrective part” of the SGP, “meant to avoid gross errors in budgetary policies”. The regulation is amended so that debt developments are followed more closely and “put on an equal footing with deficit developments”. Member States whose debt exceed 60% of GDP should take steps to reduce it at a satisfactory pace” indicated by the EU. The third regulation focuses on the effective enforcement of budgetary surveillance in the euro area. The fourth legislative measure calls for a new Directive on requirements for the budgetary framework of the Member States. Follows a regulation on the prevention and correction of macroeconomic imbalances (point five) which comprises “a regular assessment of the risks of imbalances based on a scoreboard composed of economic indicators”. For Member States “with severe imbalances or imbalances that put at risk the functioning of EMU, the Council may adopt recommendations and open an excessive imbalance procedure”. Finally, a regulation on enforcement measures to correct excessive macroeconomic imbalances in the euro area.