Commission seeks greater budget oversight

The EC is seeking far-reaching powers to intervene in the fiscal policies of member states of the eurozone. The Commission on the 23rd November proposed legislation that would give it the right to tell eurozone governments to revise draft budgets and instruct a country to request a bail-out.

Speaking in Brussels yesterday, José Manuel Barroso, the president of the European Commission, said that the increased powers would mean that "we do not face again the situation where failings in one country endanger the stability of the euro area as a whole".

"The current crisis demands not only emergency measures but lasting solutions to the structural challenges that this crisis has been exposing," he said.

Under the proposals, eurozone governments would have to submit their draft budgets for the following year to the Commission by 15 October. The Commission would be able to ask the government to revise the budget if it thought that it meant the member state would not meet its targets for debt and deficit levels.

Barroso denied that the Commission was taking over powers that belonged to national parliaments. "National budgets will of course be prepared by governments and voted on by national parliaments. Parliaments will of course have the final say."

Bail-outs

Olli Rehn, the European commissioner for economic and monetary affairs, said that it was important to be able to tell a country to request a bail-out because countries that were now receiving assistance had held out until the last minute before admitting that they needed help. This had made the situation worse and increased financing needs, Rehn said.

The Commission yesterday presented a green paper on ‘euro stability bonds', which, Barroso said, "could bring tremendous benefits" for the eurozone by creating a bigger and more liquid bond market.

The idea of Eurobonds, which would be jointly issued by more than one eurozone country, is still strongly opposed by Angela Merkel, Germany's chancellor. Speaking in Berlin yesterday, Merkel said that discussing Eurobonds at this stage of the eurozone crisis was "extraordinarily inappropriate".

Barroso said that the Commission wanted to have a "serious debate" about the merits of such bonds and rejected suggestions that there was absolute opposition to the idea. "If you look at those comments made by people from Germany, they are in fact most of all about the timing of the options we are now putting forward," he said.