Michael Creed (Cork North West, Fine Gael)
Link to this: Individually | In context

Question 27: To ask the Minister for Finance if consideration is being given at a Council of Finance Ministers Meeting to sanctions for non-compliance with the Stability and Growth Pact; the EU-wide efforts being considered to achieve greater economic convergence across the EU including improved global competitiveness; and if he will make a statement on the matter. [39567/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I assume the Deputy is referring to the work carried out by the Van Rompuy Task Force. In March 2010, in the light of the global economic and financial crisis and the deterioration in public finances across the EU, the European Council mandated a Task Force under President Van Rompuy and comprising representatives of the Member States, the European Commission and the ECB to develop proposals for improved budgetary discipline and an improved crisis resolution framework. I represented Ireland on the Taskforce.

In parallel to the Task Force, the European Commission issued Communications on economic policy co-ordination in May and June 2010 and published related legislative proposals at end September. These proposals were taken into account in the work of the Task Force.

Task Force discussions have now concluded and a report has been submitted for consideration by Heads of State and Government at the European Council meeting today and tomorrow. In relation to the Stability and Growth Pact (SGP), the Task Force recommendations aim to strengthen the Pact, to enlarge the spectrum of sanctions under the Pact and to apply them earlier and on a more automatic basis. The proposals include certain financial sanctions which would apply to euro area Member States in the case of serious and persistent non-compliance with EU budgetary obligations.

The Report also proposes the introduction alongside the SGP of a new surveillance framework to identify and correct harmful macroeconomic imbalances which if left uncorrected could jeopardise the proper functioning of economic and monetary union. An annual assessment of the risk of macroeconomic imbalances and vulnerabilities would be undertaken, using an alert mechanism based on a limited number of indicators. Euro area Member States could ultimately face sanctions in the event of repeated non-compliance.

In the context of the work of the Task Force and of the above mentioned European Commission proposals, Member States have agreed to the introduction with effect from January 2011 of a "European Semester", a reinforced cycle for co-ordination of Member States economic policies. This is designed to integrate various aspects of existing budgetary and macroeconomic surveillance procedures namely the annual submission of Stability and Convergence Programmes and of National Reform Programmes, the latter in the context of the EU 2020 strategy for Jobs and Growth. While respecting national responsibilities on fiscal and economic policies, the new timetable aims to allow for a simultaneous assessment of both budgetary measures and structural reforms fostering growth and employment so that the EU and euro area dimensions are better taken account of when countries prepare budgets and economic reform programmes.

I consider that the Task Force recommendations are a major step forward in economic governance at EU level and are to be welcomed. The next steps in the process are for the European Council to consider the Task Force recommendations and, if approved, to set in train the necessary work to implement the recommendations, many of which will require EU secondary legislation