Taskforce discussing tighter euro rules

Eurozone reviews of national budgets and tougher sanctions among options being discussed by EU crisis taskforce.

A special EU taskforce is meeting for the first time today to discuss measures to stabilise the euro and whether to tighten the EU rules intended to enhance stability in the eurozone.

Ahead of the meeting, there were calls from some finance ministers for stricter budget spending rules and for tough sanctions on any country that breached those rules.

Josef Pröll, Austria’s finance minister, told reporters that the EU had to “make sure we rap the knuckles of those countries which have been lax with their budget planning and debt”.

EU officials said at a briefing ahead of the meeting that the talks would include ideas to expand EU controls over national budgets, and a vague but radical plan to pool national debt between eurozone member states.

The meeting, which was called and chaired by Herman Van Rompuy, the president of the European Council, began as the German parliament was giving its approval to the German government to contribute €147.6 billion to a €750bn fund set up by the EU to help eurozone countries that are having difficulty meeting their debt obligations.

Wolfgang Schäuble, Germany’s finance minister, is presenting a range of measures to the taskforce, some of which would, he said, probably require changes to the EU treaty.

Ideas put forward by Germany and other members of the taskforce will be considered together with earlier proposals for greater economic co-ordination suggested by the European Commission. The taskforce will present final proposals to EU leaders in October.

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The task-force includes a representative from each EU member state (in almost all cases finance ministers) and representatives from the Commission and the European Central Bank (ECB).

Germany’s plans include introducing sanctions for countries that fail to limit their deficits to 3% of gross domestic product (GDP) such as losing EU structural funds and losing the right to vote for a certain period.

Christine Lagarde, France’s finance minister, called the ideas “very interesting proposals” and said they went “in the right direction”.

Olli Rehn, the European commissioner for economic and monetary affairs, said there was “broad endorsement” of his proposals that the EU should examine the outlines of draft national budgets as part of tighter surveillance measures. Under the plan, the Commission would be able to assess each national budget and include recommendations by finance ministers.

But France, the Netherlands, Austria, Sweden, Denmark and the UK are strongly against such a role for the Commission.

There is “nothing wrong with some assessment of forecasting, but that won’t be the crucial thing”, said Anders Borg, Sweden’s finance minister.

“The crucial thing is to get enough frontloaded consolidation to restore confidence in [European] economies so that we can see a recovery,” Borg added.

Jan Kees de Jager, the Dutch finance minister, said he would push for the creation of “an independent body” that would run the stability and growth pact, an accord that has, since 1997, required EU member states to keep their budgets below 3% of GDP and public debt below 60% of GDP.

“We want a much tougher stability and growth pact, to make conditions in it much stricter as well as its interpretation,” de Jager said.