The two regulations will strengthen economic co-ordination in the eurozone.
Ireland has secured the first major breakthrough of its presidency of the European Union's Council of Ministers by brokering a deal on rules to strengthen economic co-ordination in the eurozone.
The ‘two pack' – a pair of regulations enabling the European Commission to monitor the budgets of countries with excessive deficits and boosting its powers over countries experiencing financial difficulties – was proposed at the height of the eurozone crisis in November 2011.
Negotiations between the Council and the European Parliament – which had to agree on the legislation's final shape before it could come into effect – has taken seven months, with MEPs attempting to obtain commitments to social spending, the sharing of national debt and more democratic accountability.
Sharon Bowles, a British MEP who chairs the Parliament's economic and monetary affairs committee, acknowledged that negotiations, which concluded yesterday (20 February), had been a “long, hard slog” but said that the legislation was part of the “monumental” strengthening of economic governance that the EU had introduced over the past two years.
The Parliament did not succeed in getting its more ambitious demands written into the law. Central to MEPs' concerns were that the new rules will enshrine in law austerity and prohibit national governments from deciding to introduce more generous spending or growth-enhancing policies. What it means
The two new regulations – which still must be formally approved by the full European Parliament and national finance ministers – will lead to more intrusive oversight of draft national budgets in the eurozone by the European Commission. The Commission will inspect the budget plans each year before they go before national parliaments and tell member states if they do not conform to stability-and-growth-pact obligations or other economic policy recommendations.
The Commission will also have greater powers over countries in the eurozone that it judges to be “experiencing severe difficulties” with financial stability. The Commission could impose “enhanced surveillance” and recommend to the Council of Ministers that the country receives financial assistance.
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