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Wednesday, 14 December 2011 - Strasbourg OJ edition

6. Draft scoreboard for the surveillance of macro-economic imbalances (debate)
Video of the speeches

  President. – The next item is the oral question to the Commission by Sharon Bowles, on behalf of the Committee on Economic and Monetary Affairs: Draft scoreboard for the surveillance of macro-economic imbalances (Ο-000306/2011 – Β7-0670/2011).


  Sharon Bowles, author. – Madam President, I would like to thank the Commission for having given Parliament time to express its views on the draft scoreboard. The relevant recital of the regulation specifies that the Commission should seek comments from the competent committee of the Parliament before adopting the scoreboard. This oral question, with the accompanying motion for a resolution, is the response to this consultation.

As you know, Parliament has been very engaged on this topic. There was a very protracted debate in Parliament, and with the Council, in order to reach the final text in codecision on the ‘six-pack’, so this is a very sensitive subject for us. The scoreboard is an important tool for observing potential imbalances, even though the definitive measures are in any subsequent in-depth studies.

Parliament attached a high importance to the indicators having both upper and lower thresholds where appropriate, and envisaged this form of comparison as useful. In the draft, this is not the case for most of the indicators. Of course, it is not always appropriate to have both thresholds, but the working document does not explain the reasoning why there are not both in the majority of instances, and it would be helpful to have elaboration on that.

The issue of current account surpluses was also a matter contained in the Commission declaration. In particular, it said ‘macro-economic surveillance covers countries with current account deficits and surpluses, with appropriate differentiation as regards the urgency of policy responses and the type of corrective actions required’.

Now of course the EU is not a closed economy – and it is very important that it is not – but, with regard to one another, we need to aim for better balance within a framework of promoting competitiveness. It is also noted that the Commission working document refers to available economic literature, but no references are given. We consider that references, and a more complete explanation of the methodology, are appropriate.

Spill-over effects were also a significant part of our discussion and one of the objectives of budgetary coordination, and so we ask how the Commission intends to deal with spill-over effects in the scoreboard.

I think it is reasonable to consider the scoreboard as a ‘work in progress’, and it is noted that by the end of 2012, it is intended to set a new set of thresholds relating to financial sector indicators. There is clearly a potential relationship here with the European Systemic Risk Board dashboard indicators. For my part, I suggest that domestic SIFIs may be one area to look at for inclusion in the macro-economic scoreboard.

Also with regard to work in progress, not all of the elements specified for economic reading of the scoreboard in Article 4 have yet been taken into account. We look for all of these to be included in the economic reading of the scoreboard, most notably in relation to employment, drivers of productivity and the role of energy.

And now, more generally, how does the Commission intend to implement the scoreboard as part of the agreed regulation on the prevention and correction of macro-economic imbalances? In particular, how does it intend to implement the assessment of Member States showing large account deficits or surpluses as part of the annual alert mechanism report? What measures will the Commission take to make sure that it has timely statistics of the highest quality for inclusion in the scoreboard and its economic reading?

Finally, and as must be evident from what I have said concerning literature references and methodology, I would like to stress that a transparent implementation of this new policy instrument is of utmost importance throughout the procedure. Therefore, I urge in this respect that the Commission ensures that any updates or reports on the functioning of this instrument are formally addressed both to the European Parliament and to the Council, and on an equal basis.


  Olli Rehn, Vice-President of the Commission. – Madam President, now that the legislation for reinforced economic governance, the ‘six-pack’, has entered into force – which it did yesterday – we must hasten its implementation. On the fiscal side, this is already a work in rapid and serious progress. On the macro side, we need to move on as well. I therefore welcome your draft resolution on the envisaged design of the scoreboard for the surveillance of macro-economic imbalances as well as your oral question, which in fact consists of nine questions, to which I shall try to respond in my remaining two minutes and seven seconds.

Following your resolution tomorrow, and as the Commission received the views of the Council and the European Systemic Risk Board respectively in November, we can now finalise the design of the scoreboard without any further delay, and in full compliance with democratic principles.

The final scoreboard will become part of the alert mechanism report, which is currently scheduled for adoption by mid-January. It will be discussed in Ecofin and the Euro Group in January/February. Taking due account of these discussions, the Commission will launch in-depth reviews of the Member States for which they are needed. These in-depth reviews will analyse macro-economic imbalances and provide the basis for any recommendations to be addressed to Member States.

Let me underline the key difference between fiscal and macro-economic surveillance, and between the Excessive Deficit Procedure and the Excessive Imbalance Procedure: both are preventive, but macro-economic surveillance is even more preventive than fiscal surveillance and, as such, is necessary for economic stability and fiscal sustainability. This we have seen, for instance, in the cases of Ireland or Spain, both of which had sound public finances prior to the crisis. Once the crisis hit with its full force, however, their serious macro-economic imbalances led to a very serious fiscal crisis which then turned into a recession in the real economy and led to high unemployment, with very serious social and human consequences. Moreover, while fiscal surveillance is highly numerical and quantifiable, macro-economic surveillance requires a thorough economic reading and is much more qualitative.

This means that, when we propose countries for an in-depth study, it will not imply that they face an imminent crisis. Instead, it means that for these countries, there is a risk of imbalances which, if confirmed, would clearly need to be addressed effectively. In other words, it serves as an essential early-warning system and a strong call for pre-emptive action to correct the build up of those imbalances.

This brings me to the further aspects of your oral question, especially the regulation’s equal application to all Member States. The assessment of Member States’ current account balances is an essential element of the economic analysis of the alert mechanism report. The Commission stands fully by its declaration to the European Parliament on 28 September, stating that ‘macro-economic surveillance covers countries with current account deficits and surpluses with appropriate differentiation as regards the urgency of policy responses and the type of corrective actions required’.

To conclude, let me also recall that all 27 Member States will be subject to surveillance. Thus, all Member States will benefit from its findings, both on their own account and jointly for the common good of the European Union. I am certain that the United Kingdom will also want to participate in this work; we, for our part, want to – and indeed will – involve each and every Member State of the European Union. The regulation applies to all and we continue to work for the benefit of each and every Member State and the whole European Union, even though that sometimes seems to be forgotten in the midst of the most heated debates of the day.


  Herbert Dorfmann, on behalf of the PPE Group.(DE) Madam President, ladies and gentlemen, here in this House, we have been grappling with the subject of economic governance and the ‘six-pack’ for a long time. Yesterday, this legislative package finally entered into force. It provides us with a bundle of measures to enable us to recognise economic aberrations in the Member States at an early stage.

In the area of macro-economic surveillance, the scoreboard has always been at the centre of political discussions here in Parliament. Parliament ultimately decided to lay down the basic elements only in the legislative text and to transfer the task of drawing up the scoreboard to the Commission. The results of the Commission’s work on this are now available. The parameters proposed could be the right way to go about achieving the desired objective.

We have already discussed the symmetrical approach of the ‘six-pack’ in our political debates here in Parliament. However, the same sort of symmetrical approach also results from the somewhat erroneous assumption that the European Union is in a closed and bilateral market. If someone exports too much, does that automatically mean that others are exporting too little? I do not think so. Is the problem faced by those Member States that are currently going through difficult economic times really a result of the fact that, in comparison, other Member States are more successful on the internal market or at a global level? That would, conversely, also mean that it would not be a problem if Member States did not fulfil their economic policy tasks at national level if the main thing is that the other Member States are not doing so either. We would not get very far with that sort of approach.

The scoreboard will evolve. It requires time, and in the next few years, new indicators will be incorporated and the limit values will probably also change with economic developments. Therefore, Parliament has also determined that it is up to us to observe and evaluate these developments. That is exactly what we are doing by putting this question to you, Commissioner. As a starting point, we in the Group of the European People’s Party (Christian Democrats) consider what the Commission has tabled to be useable and useful. I am certain that it can serve its purpose and can lead to success. Therefore, we will also vote in favour of it.


  Anni Podimata, on behalf of the S&D Group.(EL) Madam President, Commissioner Rehn, yesterday’s edition of the Financial Times contained a very interesting article on why the fiscal compact agreed on 8 December will fail. With a series of logical and – I would say – self-evident arguments, many of which have been supported for some time by the European Parliament, especially by the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, the newspaper pointed out that unilateral insistence on fiscal austerity is counterproductive because, in its words, proper fiscal behaviour may, in turn, be linked to massive imbalances and economic inefficiency. Citing the example of Germany which, as you know, had a surplus in its balance of payments on current account in the order of 5.7% of GDP, which was greater than China’s surplus, the journalist pointed out that the fiscal compact will fail because it does not provide any explanation whatsoever as to exactly how that German surplus will be recycled, when more and more European countries, especially but not only in the South, will stand devoutly by strict fiscal austerity and orthodoxy. That is why, Commissioner, we consider action to address macro-economic imbalances not as a fragmentary agreement, but as a basic principle which, over and above the economic governance package, must be inextricably bound up with the new fiscal compact or, in the words of the journalist, fiscal union. May I remind you that the key to achieving agreement on the two regulations was the clear statement – by you, by the European Commission – that the procedure will apply both to Member States in surplus and to Member States with a deficit and to upper and lower limits, so that there is symmetry. This is not a dogmatic principle; it is a precondition which will ensure that the procedure has real economic convergence and balance.

(The President cut off the speaker)


  Carl Haglund, on behalf of the ALDE Group. – Madam President, I think the Commissioner explained very well why we need this macro-economic surveillance. The economic crisis proved that macro-economic imbalances can also put the European economy at stake, despite sound – or at least fairly sound – public finances.

I also think that we did a fairly thorough job in this House of working on the macro-economic surveillance part. In my view, we achieved a very good overall result, and this is now the practical implementation of that result. Personally, I am convinced by the work done by the Commission (my group is also very supportive) and the initial proposal on the table.

I think it is important to note that this is just the starting point of macro-economic surveillance. Some have wanted to give this scoreboard too large a role in the overall process. We should remember that the scoreboard is designed as an alert mechanism. The actual macro-economic surveillance and assessment will be done through in-depth studies, where we will then assess whether there is a problem that has to be addressed.

Another issue that should be mentioned is the fact that the ownership of this process should not be in the Commission. I have no doubt that the Commission wants to own it, but the fact of the matter is that the ownership should and will be in the Member States. The Member States will be the ones who have the ownership of working with a possible macro-economic imbalance, together, of course, with the good guidance and good advice of the Commission. But the ownership of the process will, and should be, in the Member States. That is the only way for this process to work, and this is something we should emphasise.

Finally, I think we should all be happy with the fact that the ‘six-pack’ legislation, which this was a part of, came into force this week. This is an important step in solving the crisis. We should all be happy about this and about the fact that the Commission is taking this work very seriously.


  Philippe Lamberts, on behalf of the Verts/ALE Group.(FR) Madam President, Commissioner, as far as I can see, in business, in politics and in life, confidence is the key to everything. I believe that you and your Directorate-General have betrayed this confidence.

You have betrayed it in three ways. First, when we had faith in you and said: ‘Parliament renounces its right to joint decision-making power over the indicators’, we had faith in you on the basis of a road map. One of the elements of this road map was that Parliament would be closely consulted. What happened is that the Directorate-General for Economic and Financial Affairs (DG ECFIN), as indeed is its custom, got into bed with the Council, and when they produced their baby together – and I do not wish to know how – they showed this baby to Parliament and asked us: ‘Are you happy?’ That is no way to consult people. I am not one for ménage à trois, but I find that in this case, frankly, you have chosen your partner and I think you have made a bad choice.

The underlying message is: ‘It is not the same thing for a country to be in surplus or in deficit’. That is true. However, to be clearly told: ‘Surplus countries will never be punished’, is tantamount to saying that excessive surpluses are not dangerous. I am very sorry, but by saying that, you ignore the fact that excessive surpluses are as dangerous as excessive deficits. This is the case, and we must deal with it just as vigorously.

Finally, as regards competitiveness, DG ECFIN has shown that, when all is said and done, its obsession has not changed: the only factor standing in the way of the competitiveness of business in Europe is its wages. We must clamp down on wages as if this were the be all and end all.

Europe will never be China. We shall never be top of the low wage league. We must win the battle for value.


  Jürgen Klute, on behalf of the GUE/NGL Group.(DE) Madam President, ladies and gentlemen, the new surveillance mechanism for economic imbalances has been in force since yesterday. The detailed regulations are also now available. What developments does the Commission now see as dangerous and what economic problems do you want to see rectified? Increases in unit labour costs in the euro area countries in excess of 3% per year are considered by the Commission to be a problem. A limit value for falling wages is not provided for, however. I would say to the Commission that ‘cheap’ is not the same thing as ‘good’. It is not enough to condition the Member States to achieve prosperity at the expense of their trading partners. Without investment in education, health and energy efficiency, we can exploit our workers to the bone, but that will not enable us to write an economic success story.

I would like to mention one more example from the scoreboard: the loss of export market share should be examined and penalties imposed. That is nonsense. In the face of increasing world trade, Europe’s share will, statistically speaking, inevitably shrink. Consequently, this indicator will penalise those countries that are already closely involved in world trade. We therefore believe that the Commission should withdraw this scoreboard and subject it to a general overhaul.


  Claudio Morganti, on behalf of the EFD Group. (IT) Madam President, ladies and gentlemen, we are today discussing rules which are likely to change swiftly, following the treaty reform imposed at the last summit by France and, above all, Germany.

We have been forced into this difficult decision even though regulation was already in place in the past to prevent macro-economic imbalances by way of the Stability and Growth Pact, which was signed way back in 1997, and yet this agreement became wastepaper precisely when France and Germany wanted to move forward, making the whole thing essentially worthless.

I am personally very unhappy that Brussels makes us act like a guard dog, but if there are to be rules in place, then these should apply to everyone and everyone should be treated in the same way, including the two Member States that want to tell us what is what today.

In Europe, all Member States and all peoples should have equal dignity and rules should be decided upon and adhered to by everyone.


  George Sabin Cutaş (S&D).(RO) Madam President, the scoreboard for the surveillance of macro-economic imbalances is needed to coordinate economic and social policies and promote convergence between Member States. This instrument must include a complete analysis of these imbalances, including current-account deficits and surpluses. We must not forget that maintaining significant and sustained current-account surpluses creates barriers for the adjustment policies which economies in deficit need to adopt.

At the same time, the issue of the competitiveness gap between Member States cannot be resolved by cutting salaries and reducing social protection. Such measures only weaken society and promote poverty and economic stagnation.

The European Union needs huge long-term investment in infrastructure and technology, especially green technology, in order to encourage job creation and foster economic growth.


  Ilda Figueiredo (GUE/NGL).(PT) Madam President, the intention behind the entry into force of the so-called economic governance package is ever deeper capitalist integration, with results that are already well known: increased unemployment, poverty and social inequality. Moreover, what is happening even within this process – and this is being well demonstrated here today – is that the intention is, in fact, to increase the exploitation of workers by reducing real wages and other remuneration for work, to facilitate the accumulation of capital, and to exacerbate social inequalities. Furthermore, the intention is also to jeopardise the interests of countries with weaker economies, by continuously throttling them and even imposing on them fines which will only aggravate the entire existing situation. This is unacceptable interference and contempt for the most fundamental principles of democracy, as this debate in the European Parliament has demonstrated.


  Franz Obermayr (NI).(DE) Madam President, I would like to express my strong opposition to subjecting surpluses to the imbalance procedure, let alone imposing sanctions as a result of them. The balance of payments is one of the 10 macro-economic indicators, and it would be perverse to penalise this and to treat it in the same way as deficits. Growth cannot be regulated by a planned economy as in the Soviet Union. Without the economically strong countries, the euro area would probably have collapsed a lot sooner. If the imbalances are too great – and I believe that is the case, too – then we must simply form a hard and a soft currency zone.

A currency must reflect the economic strength of the country. It will not work as a planned economy, however, but only with appropriately structured monetary zones. Austria, Germany, the Netherlands, Luxembourg and possibly France form one group, and the other national economies also have to be able to devalue their currencies accordingly.


  Phil Prendergast (S&D). – Madam President, I can only hope that the unsustainable nature of the path chosen has become as evident as it is ultimately self-defeating for the whole Union.

Stuck with the same currency with no possibility for competitive devaluation, peripheral countries found themselves confined to wage deflation and to growth trends fed by financial credit from the centre, where competitiveness owes a lot to cheap wages as well. Our problems have no easy solutions, but we at the edge of the eurozone have sustained severe economic pain, only to be promised more of it by the recent political developments such as the ‘six-pack’ tightening of the Stability and Growth Pact.

Where is the solidarity side of that grand bargain? Is it just more loans at rates barely below those demanded by extortionate, speculative market players? We need reform that works both ways and serves all of our citizens.


  Jaroslav Paška (EFD). (SK) Madam President, the procedures for countering and correcting macro-economic imbalances should include a mechanism to warn Member States that are reporting a high deficit or current account surplus. A basic precondition for the supervision of macro-economic imbalances should be an assessment table containing the necessary data on the economic management of states. In view of the seriousness of the decisions that will result from the data captured in the assessment reports, it is important for all of the recorded statistical data to be objective and to provide the necessary relevant values. I therefore firmly believe that it is enormously important to choose a method of collecting input data for the assessment table that will rule out the possibility of it being creatively adjusted in the process of collection, so that the Commission can have correct and objective supporting materials for its work. Only on the basis of correct data can correct assessments be made, and that should also be the aim of the Commission.


  Olli Rehn, Vice-President of the Commission. – Madam President, I should like to thank the Members for a very serious and substantive debate and for their support for this regulation and for the Commission’s actions in this regard.

Concerning the question posed by Ms Bowles on the literature behind this scoreboard, the Commission is currently working on background papers that will explain the economic rationale underlying the choice of indicators, including the relevant economic literature and the determination of thresholds. I can commit myself, the Commission, and even DG ECFIN to providing you with these background papers concerning the underlying economic rationale.

Ms Podimata referred to a certain British financial media source. I do not think its words are sacrosanct. I recall, for instance, that in that source, the euro area was not described as a small open economy, but I have a feeling that some commentators consider that the euro area is a large, closed economy. It is not a large closed economy. Instead, it is a large open economy that trades a very large share of its GDP with the rest of the world. This has obvious implications for the construction of our analytical mechanism of macro-economic imbalances.

The legislation enshrines the approach of intelligent symmetry, whereby surveillance covers both deficits and surpluses, but clearly underlines that there is greater urgency in tackling large deficits. Moreover, policy responses need to be differentiated. I refer to the alert mechanism report which, in Article 3.2, states ‘The assessment of Member States showing large current account deficits may differ from that of Member States that accumulate large current account surpluses’.

I think the background noise suggests that it is time to close this debate. It is not very conducive to analytical debate on macro-economic imbalances, so I suggest we continue our dialogue in the Committee on Economic and Monetary Affairs shortly.


  President. – I have received one motion for a resolution(1)tabled in accordance with Rule 115(5) of the Rules of Procedure.

The debate is closed.

The vote will take place at 11.30 on Thursday, 15 December 2011.




(1)See Minutes

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