Today’s Eurozone governance rules are too complex, lack ownership and are not consistently enforced, MEPs say in a resolution voted on Wednesday. The text is Parliament's input to the discussions on the future of the economic governance framework, including Thursday's European summit debate on the so-called five presidents' report on completing the EU's economic and monetary union.

The resolution was adopted by 317 votes to 254, with 9 abstentions.

"The crisis forced us to take drastic measures, but I'm not convinced they have always been the right ones. They enabled us to resolve some of the issues in the short term but they have not led to the completion of the economic and monetary union," said the rapporteur, Pervenche Berès (S&D, FR), adding: "For reforming the economic governance in the Eurozone, we need the same political will that led to the establishment of the banking union."

Flexibility and Juncker Plan investments

MEPs back the European Commission's three-pillar strategy, calling for investments, fiscal consolidation and structural reform, but encourage it to apply this strategy more specifically when assessing national draft budgets and deciding on country-specific recommendations (CSRs).

The resolution welcomes the Commission's interpretation of fiscal flexibility, including the possibility of temporarily deviating from budget deficit adjustment paths in the case of certain investments. MEPs accept that if member states' contributions to the European Fund for Strategic Investments (EFSI or Juncker Plan) push their deficits above the 3% of GDP limit, this will not automatically trigger an excessive deficit procedure, provided that the contributions do not replace already planned investments.

National circumstances, spill-over effects and effects on Eurozone as a whole

The report says that the Commission should pay more attention to specific national circumstances when deciding on country-specific recommendations. It should also keep a closer eye on spill-over effects in other member states, take the Eurozone as a whole into consideration and better coordinate its recommendations with the excessive debt procedure, says Parliament.

National ownership and democratic oversight

Structural reform plans should require approval by national parliaments and involve social partners at all stages, in order to improve their effectiveness and strengthen the sense of national ownership, say MEPs.

To improve the legitimacy of convergence guidelines (which contain targeted priorities for the coming years) at EU level, they should be approved by Parliament and Council under the co-decision procedure, says Parliament, adding that a provision for this should be included in the next treaty change.

Future assistance programmes within Community framework

MEPs demand that the European Stability Mechanism (ESM) and the Fiscal Compact be fully integrated into the Community framework and thus made formally accountable to Parliament.

The resolution also repeats Parliament's demand for options to be drawn up for a new legal framework for future macroeconomic adjustment programmes to replace the EU Commission/European Central Bank/International Money Fund “Troika”. This should improve the transparency and ownership of these programmes and ensure that all EU decisions are, where possible, taken in line with the Community method. The Eurogroup's decision-making process should also be reassessed with a view to improving its democratic accountability, adds the text.

Context and next steps

The CSRs will need to be endorsed at this week's European Council summit of EU leaders and formally approved by economy and finance ministers (ECOFIN) on 14 July. At the summit, heads of state and government will also discuss the "Five presidents' report" on completing Europe's economic and monetary union.

Procedure: Non-legislative resolution