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23 June 2011

Parliament seals its position ahead of European Council on Economic Governance

This EP position will form the backbone of the talks between MEPs and Member States, which are set to continue in earnest in order to reach a final deal as soon as possible.

More transparency, stronger automatic warnings and sanctions as well as new fines are all part of Parliament's position. Left-of-centre groups, however, warn that this represents too much austerity.

Parts of the package, particularly those dealing with strengthening of the stability and growth pact, went through with slim margins, with the S&D, Greens/EFA and GUE/NGL groups voting against because of what they considered to be an excessive focus on fiscal control with little room for continuing vital investment needed for long-term growth and employment. The texts dealing with preventing macro-economic imbalances (overheating economies) garnered significant majorities.

Important points emerging from the vote

The adopted texts contain a range of improvements extracted by MEPs during the latest negotiation session concluded with the Hungarian presidency last week. They do not include Ecofin's proposals made on Monday, deemed insufficient by the rapporteurs. Among the new points are:

• Increased use of reversed qualified majority voting (RQMV) to make warnings and sanctions more automatic. This is particularly the case regarding the declaration that a Member State has taken no corrective action to remedy identified macroeconomic imbalances.
• More transparency by making public more texts and discussions than previously envisaged. Also through the involvement of the EP and national parliaments in holding Member States to account. 
• Codification of the European semester into the legal texts, thereby giving legal weight to this procedure.
• Increased powers for the Commission through requiring more information to be supplied to it than previously envisaged and through surveillance missions to Member States.
• A new fine (0.5% GDP) for fraudulent statistics with regard to data on deficits and debt.
• An interest bearing deposit sanction (0.1% GDP) in the event of a Member State not acting upon recommendations to rectify a macroeconomic imbalance.
• Increased independence of statistical bodies.
• More detail on indicators to be used for checking for macroeconomic imbalances to ensure that the Commission does not only look at pure economic indicators but also keeps the social dimension in mind.
• Safeguarding of social bargaining processes and wage setting agreements.
• Revision clause on Eurobonds (Eurosecurities). By the end of 2011 Commission to prepare a report and possibly legislative proposals.
Pending issues also in the six-pack adopted in plenary

Although there is as yet no firm agreement on the following points, they also feature in the texts adopted on Thursday by MEPs:
• No agreement yet on issuing declarations to Member States which disregard Commission warnings on expenditure overshoots. This is included in the adopted texts since it is considered as the door to imposing sanctions and therefore can provide a real incentive to a country to rectify its situation.
• Hearing of finance ministers by the EP. The drafting proposed by the plenary would see the EP "offer the opportunity to the Member State concerned (...) to participate in an exchange of views".
• A reference to the need to look at high surplus current account countries (like Germany) as well as countries with deficit current accounts (high import countries) when evaluating the causes of a macroeonomic imbalance.

Results of votes

• Prudent fiscal policy and economic policy coordination (Wortmann-Kool report): 333 in favour/303 against/26 abstentions
• Speeding up and clarifying the implementation of the excessive deficit procedure (Feio report): 339/304
• Sanctions related to breaches of the stability and growth pact rules (Goulard report): 336/269/58
• Preventing and correcting macroeconomic imbalances (Ferreira report): 551/88/29
• Sanctions related to macroeconomic imbalances (Haglund report): 368/80/209
• Standards for national budgetary frameworks (Ford report): 468/156/48.

Press release

© European Parliament

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