BRUSSELS (MNI) – European policymakers agreed to increase economic
monitoring from the beginning of next year as they hashed out plans for
greater economic governance in the European Union at a meeting on
Monday.

Greater attention will be given to debt levels, and sanctions for
budget rule-breakers will be reformed, Herman Van Rompuy, president of
the Council of Europe and chair of the economic governance taskforce,
said in a statement.

But the proposals still lacked detail, with the section on
sanctions for budget rule breakers particularly vague.

The tricky part will be agreeing the details.

“The broad parameters of a reform of sanctions were discussed,” Van
Rompuy’s statement said.

“The field of financial and non financial sanctions should be
expanded…Sanctions should be progressive, and different options for
enhance automaticity have been discussed,” the statement continued.

The EU already has sanctions for rule breakers, but in the past it
has relied heavily on verbal warnings.

UK Chancellor George Osborne told ministers he prefers the “naming
and shaming” option to firm sanctions.

In a letter to the taskforce ahead of the meeting, Osborne said he
didn’t mind sanctions being strengthened for Eurozone countries or those
countries waiting to join the Eurozone but that “sanctions cannot apply
to the UK.”

The UK Chancellor said he strongly supported the idea of putting
more emphasis on levels of debt within EU countries. EU rules currently
stipulate that a country’s debt shouldn’t exceed 60% of its GDP. In the
past that rule has been overlooked as policymakers chose to focus on the
budget deficit limit, which is 3% of GDP.

“Greater attention should be paid to the debt, both in setting
objectives budget and monitoring procedures,” the statement said.

It also said a broad agreement had been reached on the European
Semester, an idea which would see EU governments having greater input in
each others’ national budget plans.

What this will mean in practise is unclear, as several countries,
including the UK and France, have said their budgets will still pass
through their national parliaments first.

Monday marked the third meeting of the EU Economic Taskforce, which
will meet once more before reporting back to EU heads of state on the
best ways to upgrade economic rules within the bloc.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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