Tomorrow, finance ministers from all EU member states will meet to formally vote on a new set of proposals drafted by the European Commission. Entitled the ‘new economic governance package’, these proposals have been in preparation for many long months. They have been worked on by an army of national experts in the Council and civil servants within the Commission. Government representatives in Brussels have been making sure that any disagreements are ironed out before ministers meet tomorrow to stamp the package with their approval. The package was already all but finalized at the last meeting of EU finance ministers in Poland (see relevant statement by the Polish Presidency of the EU here).
The economic governance package contains six new legal instruments (see here for a summary), hence it’s nickname, the ‘six-pack’. Its main goal is to tighten supervision over national government budgets. The philosophy underpinning the package seems to be that the current European crisis is the result of excess spending by governments (for why this is only a partial account of the crisis, see here). The proposals are thus designed to “lock-in” prudent fiscal policy through an array of rules and a tightened sanctions regime. Governments running excessive deficits, for instance, will only be able to avoid a sanction from the European Commission if the Council musters in return a qualified majority of votes against the sanction (the so-called “reverse voting mechanism”). The Commission’s supervision of government spending will be expanded to include overall government debt in addition to its existing role in supervising deficits. The package also includes a new ‘excessive imbalance procedure’: an in-depth review of a country’s economic situation undertaken by the European Commission at the demand of the Council. Based on the results of this procedure, the country concerned would have to present to the Council a plan for how to resolve these ‘excessive imbalances’.
As a measure of what will be the consequences of the Eurozone crisis, this is a good start. More dramatic developments may ensue as governments struggle to contain the consequences of a likely Greek default. But as far as the day-to-day running of the Eurozone goes, the measures proposed by the Commission are likely to form the horizon for macro-economic policy in the EU for the years to come. Looking at the proposals, we see that nothing fundamentally different is being proposed. The modifications point to a tougher regime of regulation of national economic policy, particularly as regards government spending. The connection between national finance and economic ministries and pan-European institutions of control and supervision will become tighter. And the scope for pressuring countries with budgetary difficulties will increase. Being a member of the EU won’t change dramatically, but it will become a meaner and harder-edged place. And the presumption of the package is simple and is consistent with the philosophy of the EU as a whole: bad behaviour by national governments is to blame; greater supervision by external, non-partisan authorities is the solution.