12 December 2012

European Council 13-14 December 2012: Draft conclusions

Roadmap for the completion of EMU

5. The immediate priority is to complete and implement the framework for stronger economic governance, including the "six-pack", the Treaty on Stability, Coordination and Governance (TSCG) and the "two-pack". Following the decisive progress achieved on the key elements of the  "two-pack", the European Council calls for its rapid adoption by the co-legislators.

6. In 2013, the EU's economic surveillance framework should be further strengthened by ensuring that all planned major economic policy reforms of participating Member States are discussed ex ante and, where appropriate, coordinated within the framework of the EU's economic governance, in line with Article 11 of the TSCG. The Commission has announced its intention to make a proposal for a framework for ex ante coordination of major economic policy reforms in the context of the European Semester.

7. It is equally urgent to advance towards a more integrated financial framework, which will help restore normal lending to the economy and improve the necessary conditions to promote the competitiveness of the economy. 

9. The European Council urges the co-legislators to agree on the proposals for a Recovery and Resolution Directive and for a Deposit Guarantee Scheme Directive before June 2013; the Council for its part should reach agreement by the end of March 2013.

10. The European Council looks forward to the Commission's rapid follow up to the proposals of the high level expert group on the structure of the EU banking sector.

11. Further to the June 2012 euro area Summit statement and the October 2012 European Council conclusions, an operational framework should be agreed no later than March 2013, so that when an effective single supervisory mechanism is established, the European Stability Mechanism could, following a regular decision, have the possibility to recapitalise banks directly.

12. ...As soon as the proposals for a Recovery and Resolution Directive and for a Deposit Guarantee Scheme Directive have been adopted, the Commission will submit in the course of 2013 a proposal for a single resolution mechanism for Member States participating in the SSM, to be examined by the co-legislators with a view to its adoption as a matter of priority and by the end of the current parliamentary cycle at the latest. It should safeguard financial stability and ensure an effective framework for resolving financial institutions while protecting taxpayers in the context of banking crises. The single resolution mechanism should include appropriate and effective common backstop arrangements.

13. Member States need to promote strong and sustainable economic growth, competitiveness and employment, in line with the Europe 2020 Strategy, which is implemented through the country-specific recommendations and the National Reform Programmes. Individual arrangements of a contractual nature with EU institutions on the measures and reforms they commit to undertake could enhance ownership and effectiveness. This would apply to euro area Member States, but non-euro area countries may also choose to enter into similar arrangements. Such arrangements should result from a dialogue on the country-specific recommendations and be differentiated depending on Member States' specific situations, for instance with respect to excessive macro-economic imbalances. The European Council will return to this issue in March 2013, after an informal process of consultations with the Member States and the Commission on the specific ways to put in place these contractual arrangements and on the means to support their implementation, building on existing EU procedures. The Commission has already announced its intention to submit a proposal after the decision on the MFF has been taken.

14. More generally, as the EMU evolves towards deeper integration, including on budgetary matters, a number of other important issues will need to be further examined. This could include a shock absorption function to improve the resilience of the euro area as well as a sound policy mix and an enhanced coordination of economic policies notably in areas covered in the Euro Plus Pact. The work conducted to date by the President of the European Council together with the Presidents of the Commission, the European Central Bank and the Eurogroup, as well as the Commission's "Blueprint", provide a useful input to a debate on all these issues. These issues will take more time and will require in-depth consultations with the Member States. Some of these issues may imply a change to the Treaties. The European Council will discuss these questions after the election of a new European Parliament and the appointment of a new Commission.

15. Throughout the process, the general objective remains to ensure democratic legitimacy and accountability at the level at which decisions are taken and implemented. Any new steps towards strengthening economic governance will need to be accompanied by further steps towards stronger legitimacy and accountability. At national level, moves towards further integration of the fiscal and economic policy frameworks would require that Member States ensure the appropriate involvement of their parliaments. Further integration of policy-making and greater pooling of competences at the EU level must be accompanied by a commensurate involvement of the European Parliament. New mechanisms increasing the level of cooperation between national parliaments and the European Parliament, in line with Article 13 of the TSCG and Protocol No 1 to the Treaties, can contribute to this process. This could take the form of a conference of representatives of the relevant committees of the European Parliament and representatives of the relevant committees of national parliaments. The precise organisation and modalities of this is a responsibility for the European Parliament and national parliaments to determine jointly.

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