Procedure : 2010/0280(COD)
Document stages in plenary
Document selected : A7-0178/2011

Texts tabled :

A7-0178/2011

Debates :

PV 22/06/2011 - 16
PV 22/06/2011 - 18
CRE 22/06/2011 - 15

Votes :

PV 23/06/2011 - 12.13
PV 23/06/2011 - 12.17
CRE 23/06/2011 - 12.13
Explanations of votes
Explanations of votes
Explanations of votes
Explanations of votes
PV 28/09/2011 - 4.8
Explanations of votes
Explanations of votes
Explanations of votes

Texts adopted :

P7_TA(2011)0421

REPORT     ***I
PDF 536kWORD 481k
29 April 2011
PE 454.680v02-00 A7-0178/2011

on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

(COM(2010)0526 – C7-0300/2010 – 2010/0280(COD))

Committee on Economic and Monetary Affairs

Rapporteur: Corien Wortmann-Kool

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
 OPINION OF THE COMMITTEE ON LEGAL AFFAIRS ON THE LEGAL BASIS
 OPINION of the Committee on Employment and Social Affairs
 PROCEDURE

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

(COM(2010)0526 – C7-0300/2010 – 2010/0280(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

–   having regard to the Commission proposal to Parliament and the Council (COM(2010)0526),

–   having regard to Article 294(2) and Article 121(6) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7-0300/2010),

–   having regard to the opinion of the Committee on Legal Affairs on the proposed legal basis,

–   having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–   having regard to the opinion of the European Central Bank of 16 February 2011(1),

–   having regard to Rules 55 and 37 of its Rules of Procedure,

–   having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of the Committee on Employment and Social Affairs (A7-0178/2011),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

POSITION OF THE EUROPEAN PARLIAMENT

AT FIRST READING(2)*

---------------------------------------------------------

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 121(6) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1)      The coordination of the economic policies of the Member States within the Union, as provided by the Treaty on the Functioning of the European Union (TFEU), should entail compliance with the guiding principles of stable prices, sound public finances and monetary conditions and a sustainable balance of payments.

(2)      The Stability and Growth Pact initially consisted of Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure and the Resolution of the European Council of 17 June 1997 on the Stability and Growth Pact . Regulations (EC) No 1466/97 and (EC) No 1467/97 were amended in 2005 by Regulations (EC) No 1055/2005 and (EC) No 1056/2005 respectively. In addition Council Report of 20 March 2005 on 'Improving the implementation of the Stability and Growth Pact' was adopted.

(3)      The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth underpinned by financial stability, thereby supporting the achievement of the Union’s objectives for sustainable growth and employment.

(4)      The preventive part of the Stability and Growth Pact requires that Member States should achieve and maintain a medium-term budgetary objective and submit stability and convergence programme to that effect.

(4a)    The preventive part of the Stability and Growth Pact would benefit from more stringent forms of surveillance in order to ensure Member States' consistency and compliance with the Union's budgetary coordination framework.

(5)      The content of the stability and convergence programmes as well as the procedure for their examination should further be developed both at national and at the Union level in the light of the experience gained with the implementation of the Stability and Growth Pact.

(5a)    The budgetary targets in the stability and convergence programmes should explicitly take into account of the measures adopted in line with the Broad Economic Policy Guidelines, the Guidelines for the Employment Policies of the Member States and the Union and, in general, the national reform programmes.

(5b)    The Commission should have a stronger and more independent role in the enhanced surveillance procedure as regards assessments that are specific to each Member State, monitoring, missions, recommendations and warnings. In particular, the role of the Council should be limited in the steps leading to potential sanctions and the reversed qualified majority voting in the Council should be used wherever possible under the TFEU.

(5c)     Experience gained and mistakes during the first decade of functioning of the economic and monetary union shows a need for improved economic governance in the Union, which should be built on a stronger national ownership of commonly agreed rules and policies and on a more robust surveillance framework at the Union level of national economic policies.

(5d)    The improved economic governance framework should rely on several inter-linked policies for sustainable growth and jobs, which need to be coherent with each other, in particular a Union strategy for growth and jobs, with particular focus upon development and strengthening of the internal market, fostering international trade and competitiveness, an effective framework for preventing and correcting excessive budgetary positions (the Stability and Growth Pact), a robust framework for preventing and correcting macro-economic imbalances, minimum requirements for national budgetary frameworks, enhanced financial market regulation and supervision including macro-prudential supervision by the European Systemic Risk Board, and a credible permanent crisis resolution mechanism.

(5e)     The Stability and Growth Pact and the complete economic governance framework should complement and be compatible with a Union strategy for growth and jobs. However, these inter linkages should not provide for exemptions to the provisions of the Stability and Growth Pact.

(5f)     Strengthening economic governance should go hand in hand with reinforcing the democratic legitimacy of economic governance in the Union, which should be achieved through a closer and more timely involvement of the European Parliament and the national parliaments throughout the economic policy coordination procedures.

(5g)    The European semester for economic policy coordination (Semester) should play a vital role in implementing the requirement under Article 121(1) TFEU that Member States regard their economic policies as a matter of common concern and coordinate them accordingly. Transparency, accountability and independent oversight are an integral part of enhanced economic governance. The Council and the Commission should make public and set out the reasons for their positions and decisions at the appropriate stages of the economic policy coordination procedures.

(5h)    Treaty-based instruments for economic policy coordination and surveillance should be strengthened by establishing a common framework for the submission, monitoring and implementation of national reform programmes that enhance competitiveness and are conducive to sustainable growth and employment as an integral part of a European growth strategy.

(5i)     In order to enhance national ownership of the Stability and Growth Pact, national budgetary frameworks should be fully aligned with the objectives of multilateral surveillance in the Union, and, in particular, with the Semester, in the context of which the national parliaments and all other relevant stakeholders, in particular the social partners, should be informed in a timely manner and should be duly involved.

(5j)     The relevant stakeholders, in particular the social partners and the European platform against poverty and for social inclusion, should be consulted, within the framework of the Semester, on the main policy measures to be discussed by the Union institutions.

(5k)    Article 3 of the Protocol (No 12) on the excessive deficit procedure annexed to the Treaties provides that Member States ensure that national procedures in the budgetary area enable them to meet their obligations in this area deriving from the Treaties. Member States whose currency is the euro should therefore anchor the objectives of the Union fiscal framework in national law, and should ensure that adequate budgetary procedures are in place for meeting those objectives.

(6)      Adherence to the medium-term budgetary objective of budgetary positions should allow Member States to have a safety margin with respect to the 3 % of GDP reference value in order to ensure sustainable public finances or a rapid progress towards sustainability while leaving room for budgetary manoeuvre, in particular taking into account the needs of public investment conducive to the achievement of the Union’s growth and jobs objectives.

(6a)    Member States should, in the framework of national budgetary law, set targets for deficits and surpluses for three years ahead, aiming for medium-term balance in public finances.

(7)      The obligation to achieve and maintain the medium-term budgetary objective needs to be put into operation, through the specification of principles for the adjustment path towards the medium-term objective.

(7a)    An assessment of the sustainability of public finances, including the debt level, debt profile (including maturity), ageing costs and debt dynamics should be more strongly taken into account in the required pace of adjustment towards Member-State-specific medium-term budgetary objectives to be included in the Stability and Convergence Programmes.

(8)      The obligation to achieve and maintain the medium-term-objective should equally apply to participating Member States and Member States with a derogation.

(9)      Sufficient progress towards the medium-term budgetary objective should be evaluated on the basis of an overall assessment with the structural balance as a reference, including an analysis of expenditure net of discretionary revenue measures. In this regard, and as long as the medium-term budgetary objective is not achieved, the growth rate of government expenditure should normally not exceed a reference medium-term rate of potential GDP growth, with increases in excess of that norm being matched by discretionary increases in government revenues and discretionary revenue reductions being compensated by reductions in expenditure. The reference medium-term rate of potential GDP growth should be calculated according to a commonly agreed methodology validated by the Member States.

(10)    A temporary departure from the adjustment path towards the medium-term objective may exceptionally be allowed when resulting from an unusual event outside the control of the Member State concerned and which has a major impact on the structural balance of the general government of at least 0.5% of GDP in one single year or in case of severe economic downturn for the euro-area or the Union as a whole, on condition that this does not endanger fiscal sustainability in the medium-term, in order to facilitate economic recovery.

(11)    In the event of a significant deviation from the adjustment path towards the medium-term objective a warning should be addressed by the Commission to the Member State concerned to be followed within one month by a Council recommendation, setting a deadline of no more than five months to take the necessary corrective measures. If the Member State concerned fails to take appropriate action in the deadline set by the Council, the Commission should recommend to the Council to establish that has been no effective action. The decision should be deemed adopted by the Council, unless it decides by qualified majority to reject it within ten days from the Commission adoption. At the same time the Council, on a proposal by the Commission, should report to the European Council. The Commission, in liaison with the ECB for euro area Member States and for ERM2 Member States, may carry out a monitoring mission. The Commission should report to the Council on the outcome of the mission and should make its findings public within one month.

(11a)  The Council and the Commission should make their positions and decisions public at the appropriate stages of the economic policy coordination procedures, in order to ensure effective peer pressure. The Commission should present and explain the preventive and corrective actions recommended to a Member State to the European Parliament and its competent committee. The European Parliament may invite the Member State concerned to explain its decisions and policies before its competent committee.

(12)    In order to ensure compliance with the fiscal surveillance framework of the Union for participating Member States, a specific enforcement mechanism should be established on the basis of Article 136 TFEU for cases of persistent and significant deviation from the adjustment path towards the medium-term objective, lack of corrective action or an unwillingness to cooperate.

(12a)  This Regulation should enter into force as soon as possible after its adoption. The Commission should when making proposals for measures to implement this Regulation take into account the economic and budgetary situation of the concerned Member State that are subject to an EU/IMF adjustment programme.

(13)    References contained in Regulation (EC) No 1466/97 should take account of the new Article numbering of the TFEU.

(14)    Regulation (EC) No 1466/97 should therefore be amended accordingly,

HAVE ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1466/97 is amended as follows:

-1.       Article 1 is replaced by the following:

"Article 1

This Regulation sets out the rules covering the content, the submission, the examination and the monitoring of stability programmes and convergence programmes as part of multilateral surveillance by the Council and the Commission so as to prevent, at an early stage, the occurrence of excessive general government deficits and debt and to promote the surveillance and coordination of economic policies thereby supporting the achievement of the Union's objectives for growth and employment.

This regulation sets out as a general rule that the budget of Member States shall be balanced over the economic cycle in order to ensure the sustainability of public finances."

1.        Article 2 is replaced by the following:

"Article 2

For the purpose of this Regulation:

(a)'participating Member States' means those Member States whose currency is the euro;

(b) 'Member States with a derogation' means Member States other than those whose currency is the euro."

1a.      The following section is inserted:

"SECTION 1-A

EUROPEAN SEMESTER FOR ECONOMIC POLICY COORDINATION

Article 2-a

1. In order to ensure closer coordination of economic policies and sustained convergence of the economic performance of the Member State, the Council shall conduct the multilateral surveillance referred to in Article 121(3) TFEU as an integral part of a European semester for economic policy coordination (Semester) in accordance with the objectives and requirements set out in the TFEU.

2. The Semester shall, inter alia, include:

(a) multilateral surveillance of the stability and convergence programmes under this Regulation,

(b) multilateral surveillance of the national reform programmes referred to in Article 2-ac;

(c) the formulation and implementation of the broad guidelines of the economic policies of the Member States and of the Union (Broad Economic Policy Guidelines) in accordance with Article 121(2) TFEU and the employment guidelines that must be taken into account by Member Sates in accordance with Article 148(2) (Employment Guidelines;)

(d) the implementation of the prevention and correction of macroeconomic imbalances under Regulation (EU) No .../2011;

(e) the implementation of the excessive deficit procedure under Regulation (EC) No 1467/97.

3. Any proposal by the Commission addressed to the Union as a whole as part of the Semester shall include an impact assessment of the proposed policy measures in accordance with Article 9 TFEU.

4. The European Parliament and the national parliaments shall be duly involved in the Semester in order to increase transparency, ownership and accountability of the decisions taken. In order to ensure an adequate involvement of the European Parliament, an inter-institutional agreement between the European Parliament, the European Council, the Council and the Commission shall be concluded by 31 December 2011. That inter-institutional agreement shall be reviewed every three years and amended if appropriate.

Article 2-aa

The Economic and Financial Committee set up under Article 134 TFEU, the Employment Committee, established pursuant to Article 150 TFEU, and the Social Protection Committee pursuant to Article 160 TFEU shall be consulted within the framework of the Semester wherever appropriate.

The relevant stakeholders, in particular the social partners, shall be consulted, within the framework of the Semester, on the main policy measures to be discussed by the Union institutions."

1b.      The following section is inserted:

"SECTION 1-Aa

ECONOMIC DIALOGUE

Article 2-ab

In order to enhance the dialogue between the Union institutions, in particular the European Parliament, the Council and the Commission, on the one hand, and the national parliaments, governments and other relevant bodies of the Member States on the other, and to ensure greater transparency and accountability, the competent committee of the European Parliament may conduct hearings and organise public debates on macro-economic and budgetary surveillance undertaken by the Council and the Commission."

1c.      The following section is inserted:

"SECTION -1Ab

NATIONAL REFORM PROGRAMMES

Article 2-ac

1. Member States shall establish national reform programmes in order to conduct their economic policies with the view to contribute to the achievement of the objectives of the Union, in accordance with the relevant provisions of the TFEU and with respect to their obligation to regard their economic policies as a matter of common concern under Article 121(2) TFEU.

2. Member States' national reform programmes shall support the Union's strategy for growth and jobs and shall include concrete policy targets and related reforms and public and private investment, as well as other relevant policy measures and shall be established pursuant to:

(a) the broad economic policy guidelines and the employment guidelines;

(b) the European Council's annual policy guidelines and additional commitments;

(c) any Council opinions or recommendations or warnings by the Commission to the Member State concerned in accordance with the relevant provisions of the TFEU.

3. Each Member State shall submit its national reform programme annually before 30 April to the Council and to the Commission the purpose of multilateral surveillance under Article 121(3) TFEU.

4. Each Member States shall make public its national reform programmes after the due involvement of the national parliament and after consulting national stakeholders, including social partners.

5. The Council shall, based on an assessments by the Commission and, as part of multilateral surveillance in accordance with Article 121 TFEU, monitor the implementation of Member States' national reform programmes in accordance with the policy guidelines, commitments, recommendations and warnings referred to in paragraph 2.

6. The Commission's assessments shall take into account the information provided by Member States, particularly those in the euro area, to each other and the Commission on envisaged economic policy decisions with expected significant spill-over effects, which have the potential to jeopardise the smooth functioning of the internal market and of the economic and monetary union.

7. The Council shall, based on a Commission recommendation, assess whether the planned policy actions and the economic assumptions on which the national reform programmes are based are plausible.

8. The Council, on a proposal from the Commission, shall deliver an opinion on each national reform programme. Where the Council considers that the objectives and contents of a programme should be strengthened, the Council shall, in its opinion, invite the Member State concerned to submit an adjustment of the policy measure presented in its national reform within two months. The adjusted programme shall be examined by the Council and the Commission in accordance with the procedure set out in this Article.

9. In the event of a significant divergence from the policy objectives set out in the opinion referred to in paragraph 8, the Commission shall address a warning to the Member State. The warning shall be made public. The Council, on a proposal of the Commission, may also address a recommendation to the Member State concerned to take the necessary adjustment measures.

10. The President of the Council and the President of the Commission shall report annually to the European Parliament and the European Council on the results of the multilateral surveillance in accordance with Article 121(5) TFEU. Where the Council has serious concerns as regards to the progress made by a Member State the Council may, on a proposal by the Commission, submit a report to the European Parliament and the European Council.

11. In the event referred to in paragraph 9 and 10 the European Parliament may invite the Member State concerned to explain its policies before its competent committee."

1d.      Article 2a is replaced by the following:

"Each Member State shall have a differentiated medium-term objective for its budgetary position. These Member-State-specific medium-term budgetary objectives may diverge from the requirement of a close to balance or in surplus position, while providing a safety margin with respect to the 3% of GDP government deficit ratio. Each medium-term budgetary objective shall ensure the sustainability of public finances or a rapid progress towards such sustainability while allowing room for budgetary manoeuvre, considering in particular the needs public investment.

Taking these factors into account, for Member States that have adopted the euro and for ERM2 Member States the country-specific medium-term budgetary objectives shall be specified within a defined range between -1% of GDP and balance or surplus, in cyclically adjusted terms, net of one-off and temporary measures.

The medium-term budgetary objective shall be revised every three years and, where appropriate, more frequently in the event of the implementation of a major structural reform.

The medium-term budgetary objective shall be an integral part of the national medium-term budgetary frameworks in accordance with this Regulation and Council Directive 2011/.../EU on requirements for budgetary frameworks of the Member States."

1e.      The following section is inserted:

"SECTION 1Aa

NATIONAL OWNERSHIP

Article 2aa

1. Each participating Member State shall incorporate the objectives of the Stability and Growth Pact and the obligations deriving from the TFEU in the area of budgetary policy into national law.

Participating Member States shall establish a medium- term budgetary framework, with a fiscal planning horizon of at least four years, with a view to establishing a meaningful medium-term objective.

2. For participating Member States, independent bodies or institutions acting in the field of budgetary policy shall ensure an informed national debate on current structural budget positions and on the medium-term objective as set out in this Regulation.

3. Participating Member States shall establish national numerical fiscal rules that effectively promote compliance with their respective obligations deriving from the TFEU in the area of budgetary policy. Such national numerical fiscal rules shall be fully consistent with, and complementary to, the medium-term objective.

4. Participating Member States shall elaborate national budgetary frameworks that ensure compliance with the objectives of the Stability and Growth Pact. The elaboration of national budgetary frameworks may be undertaken through national law or by way of political agreement at national level. In elaborating their national budgetary frameworks, each participating Member State shall, where appropriate, exceed the minimum requirements as specified in Council Directive 2011/.../EU on the requirements for budgetary frameworks of the Member States.

Each participating Member State shall endeavour to obtain parliamentary approval of its stability programme. Where there has been no such parliamentary approval, this shall be specified in the stability programme.

5. Member States shall take into account guidance and recommendations from the Council and the Commission, in particular when preparing their budgets, and appropriately involve national parliaments in the economic policy coordination procedures. When submitting the draft budget to the national parliament, Member States shall also submit any opinion of the Council or the Commission on the stability programme and, in the event of significant deviation from the adjustment path towards the medium term budgetary objective as referred to in the third subparagraph of Article 5(1) of this Regulation, the recommendation of the Commission, accompanied by an explanation of how those opinions and recommendations have been taken into account.

6. Member States shall ensure the professional independence of national statistical authorities, which shall be consistent with the European statistics code of practice as laid down in Regulation (EC) No 223/2009, and for national courts of auditors. As a minimum this shall require:

(a) transparent recruitment and dismissal processes which must be independent of the outcome of political elections;

(b) budgetary allocations which must be made annually;

(c) the date of publication of statistical information which must be designated at least one year in advance.

1f.       The following section is inserted:

"SECTION 1Ab

HEARING OF THE PRESIDENT OF THE EURO GROUP

Article 2ab

The President of the Euro Group may, at the request of the European Parliament or on his own initiative, be heard by the competent committees of the European Parliament, in particular in regard to the work programme of the Euro Group, the economic situation in the euro area, the evolution of macro-economic imbalances within the euro area, the competitiveness in the participating Member States and the real convergence of their economies, the sustainability of the budgetary positions of the participating Member States and the achievement of their stability programmes and national reform plans and the evolution of macro-economic imbalances within the Union."

2.          Article 3 is amended as follows:

(a)       paragraph 1 is replaced by the following:

"1. Each participating Member State shall submit to the Council and Commission information necessary for the purpose of multilateral surveillance at regular intervals under Article 121 TFEU in the form of a stability programme, which provides an essential basis for the sustainability of public finances which is conducive to price stability, strong sustainable growth and employment creation."

(b)      paragraph 2 is amended as follows:

(i)     point (a) is replaced by the following:

"(a) the medium-term budgetary objective and the adjustment path towards this objective for the general government balance as a percentage of GDP, the expected path of the general government debt ratio, the planned growth path of government expenditure, including the corresponding allocation for gross fixed capital formation, in particular bearing in mind the conditions and criteria to establish the expenditure growth under Article 5(1), the planned growth path of government revenue at unchanged policy and a quantification of the planned discretionary revenue measures;"

(ia)      the following point is inserted:

"(aa) the expected path of the general government debt ratio, as well as information on any implicit or contingent liabilities, such as the expected budgetary costs of ageing and public guarantees, the exact nature of that information being set out in a harmonised framework to be established by the Commission;"

(ib)      the following point is inserted:

"(ab) information on the consistency of the stability programme with the broad economic policy guidelines and the national reform programme;"

(ii)       point (c) is replaced by the following:

"(c) a quantitative assessment of the budgetary and other economic policy measures being taken or proposed to achieve the objectives of the programme, comprising a comprehensive cost-benefit analysis of major structural reforms which have direct long-term positive budgetary effects, including by raising sustainable potential growth;"

(ba)  the following paragraph is inserted:

"2a. The stability programme shall be based on realistic and cautious macroeconomic and budgetary forecasts using the most up-to-date information. Budgetary planning shall be based on the most likely macro-fiscal scenario or on a more prudent scenario that highlights in detail deviations from the most likely macro-fiscal scenario. The macroeconomic and budgetary forecasts shall be prepared taking into account the Commission forecasts and those of other independent bodies as appropriate. Significant divergences between the chosen macro-fiscal scenario and the Commission forecasts shall be explained in the stability programme."

(c)     paragraph 3 is replaced by the following:

"3. The information about the paths for the general government balance and debt ratio, the growth of government expenditure, the planned growth path of government revenue at unchanged policy, the planned discretionary revenue measures, appropriately quantified, and the main economic assumptions referred to in paragraph 2(a), (aa), (ab) and (b) shall be on an annual basis and shall cover, the preceding year, the current year and at least the following three years".

3.          Article 4 is replaced by the following:

"Article 4

1. Stability programmes shall be submitted annually between 1 and 30 April. A Member State adopting the euro shall submit a stability programme within six months of the Council Decision on its participation in the euro.

2. Member States shall make public their stability programmes."

4.          Article 5 is replaced by the following:

"Article 5

1. Based on assessments by the Commission and the Economic and Financial Committee, the Council shall, within the framework of multilateral surveillance under Article 121 TFEU, examine the medium-term budgetary objectives presented by the Member States concerned in their stability programmes, assess whether the economic assumptions on which the programme is based are plausible, whether the adjustment path towards the medium-term budgetary objective is appropriate, including consideration of the accompanying path for debt ratio and whether the measures being taken or proposed to respect that adjustment path are sufficient to achieve the medium-term budgetary objective over the cycle.

The Council and the Commission, when assessing the adjustment path toward the medium-term budgetary objective, shall examine if the Member State concerned pursues an appropriate annual improvement of its cyclically-adjusted budget balance, net of one-off and other temporary measures, required to meet its medium-term budgetary objective, with 0.5% of GDP as a benchmark. For Member States faced with a debt level exceeding 60% of GDP or with pronounced risks of overall debt sustainability, the Council and the Commission shall examine whether the annual improvement of the cyclically-adjusted budget balance, net of one-off and other temporary measures is significantly higher than 0.5% of GDP. The Council and the Commission shall take into account whether a higher adjustment effort is made in economic good times, whereas the effort may be more limited in economic bad times.

Sufficient progress towards the medium-term budgetary objective shall be evaluated on the basis of an overall assessment with the structural balance as the reference, including an analysis of expenditure net of discretionary revenue measures. To this effect, the Council and the Commission shall assess whether the growth path of government expenditure, taken in conjunction with the effect of measures being taken or planned on the revenue side, is in accordance with the following conditions:

(a) for Member States that have achieved the medium-term budgetary objective, annual expenditure growth does not exceed a reference medium-term rate of potential GDP growth, unless the excess is matched by discretionary revenue measures;

(b) for Member States that have not yet reached their medium-term budgetary objective, annual expenditure growth does not exceed a rate below a reference medium-term rate of potential GDP growth, unless the excess is matched by discretionary revenue measures. The size of the shortfall of the growth rate of government expenditure compared to a reference medium-term rate of potential GDP growth is set in such a way as to ensure an appropriate adjustment towards the medium-term budgetary objective;

(c) for Member States that have not yet reached their medium-term budgetary objective, discretionary reductions of government revenue items are matched either by expenditure reductions or by discretionary increases in other government revenue items or both.

The expenditure aggregate shall exclude interest expenditure, expenditure on EU programmes fully matched by EU funds revenue and non-discretionary changes in unemployment benefit expenditure.

The excess of expenditure growth over the medium-term reference shall not be counted as a breach of the benchmark to the extent that it is fully offset by revenue increases mandated by law.

The reference medium-term rate of potential GDP growth shall be assessed on the basis of forward looking projections, or where they do not lead to a slower adjustment path toward the medium-term objective, on the basis of backward looking projections. Projections shall be updated at regular intervals. The Commission shall make public a transparent, independent and reasoned assessment of the methodology of those projections.

When defining the adjustment path to the medium-term budgetary objective for Member States that have not yet reached this objective and in allowing a temporary deviation from this objective for Member States that have already reached it, under the condition that an appropriate safety margin with respect to the deficit reference value is preserved and that the budgetary position is expected to return to the medium-term budgetary objective within the programme period, the Council and the Commission shall take into account the implementation of major structural reforms which have direct long-term positive budgetary effects, including by raising potential sustainable growth, and therefore a verifiable impact on the long-term sustainability of public finances.

Special attention shall be paid to pension reforms introducing a multi-pillar system that includes a mandatory, fully funded pillar. Member States implementing such reforms shall be allowed to deviate from the adjustment path to their medium-term budgetary objective or from the objective itself, with the deviation reflecting the net cost of the reform to the publicly managed pillar, under the condition that the deviation remains temporary and that an appropriate safety margin with respect to the deficit reference value is preserved.

The Council and the Commission shall furthermore examine whether the contents of the stability programme facilitate the achievement of sustained and real convergence within the euro area, closer coordination of economic policies and whether the economic policies of the Member State concerned are consistent with the broad economic policy guidelines and the employment guidelines of the Member States and of the Union.

In case of an unusual event outside the control of the Member State concerned and which has a major impact on the structural balance of the general government of at least 0.5% of GDP in one single year or in periods of severe economic downturn for the euro area or the Union as a whole Member States may be allowed to temporarily depart from the adjustment path towards the medium-term objective referred to in the third subparagraph, on condition that this does not endanger fiscal sustainability in the medium-term.

2. The Commission shall examine the stability programme within ▌three months of the submission of the programme. The Commission shall, after consulting the Economic and Financial Committee, if necessary, recommend to the Council to deliver an opinion on the programme. The opinion shall be deemed adopted by the Council, unless it decides by qualified majority, within ten days to reject it. Where the objectives and the content of the programme need strengthening with particular reference to the adjustment path towards the medium-term budgetary objective, the ▌ opinion shall invite the Member State concerned to adjust its programme."

5.          Article 6 is replaced by the following:

"Article 6

1. As part of multilateral surveillance in accordance with Article 121(3) TFEU, the Council and the Commission shall monitor the implementation of stability programmes, on the basis of information provided by participating Member States and of assessments by the Commission and the Economic and Financial Committee, in particular with a view to identifying actual or expected significant divergences of the budgetary position from the medium-term budgetary objective, or from the appropriate adjustment path towards it ▐.

2. In the event of a significant deviation from the adjustment path towards the medium-term objective referred in the third subparagraph of Article 5(1) of this Regulation, and in order to prevent the occurrence of an excessive deficit, the Commission, in accordance with Article 121(4) TFEU shall address a warning to the Member State concerned. Such a warning shall be made public. The European Parliament may invite the Member State concerned to explain its policies before its competent committee. In the event of such significant deviation, the Commission may require additional reporting from the Member State concerned.

The Council shall, within one month of any significant deviation as referred to in the first subparagraph, adopt a recommendation for policy measures setting a deadline of no more than five months, for addressing the deviation, on the basis of a Commission recommendation. In the event of a particularly significant deviation or in a particularly serious situation, the deadline shall be no more than three months. The Council, on a proposal from the Commission, shall make the recommendation public.

The Commission shall monitor the measures contained in the recommendation on the basis of surveillance visits in accordance with Article -11 of this Regulation and prepare a report to the Council. That report shall be made public within one month.

If the Member State concerned fails to take appropriate action within the deadline specified in a Council recommendation under the second subparagraph, the Commission shall immediately recommend to the Council to establish that there has been no effective action. The decision shall be deemed adopted by the Council unless it decides by qualified majority to reject the recommendation within ten days of the Commission adopting it. At the same time, the Council, on a proposal from the Commission, shall address a formal report to the European Council.

The process from the Council recommendation referred to in the second subparagraph to the final Council recommendation and report to the European Council referred to in the fourth subparagraph shall be no longer than six months.

A deviation from the medium-term budgetary objective or the appropriate adjustment path towards it shall be evaluated on the basis of an overall assessment with the structural balance as the reference, including an analysis of expenditure net of discretionary revenue measures, as defined in Article 5(1).

The assessment of whether the deviation is significant shall notably include the following criteria:

For a Member State that has not reached the medium-term budgetary objective, when assessing the change in the structural balance, whether the deviation is at least 0.5% of GDP in one single year or at least 0.25% of GDP on average per year in two consecutive years; when assessing expenditure developments net of discretionary revenue measures, whether the deviation has a total impact on the government balance of at least 0.5% of GDP in one single year or cumulatively in two consecutive years.

The deviation shall not be considered if the Member State concerned has significantly overachieved the medium-term budgetary objective, taking into account the presence of excessive macroeconomic imbalances, and the budgetary plans laid out in the stability programme do not jeopardise this objective over the programme period.

The deviation may be equally not considered when resulting from an unusual event outside the control of the Member State concerned and which has a major impact on the structural balance of the general government of at least 0,5% of GDP in one year or in case of severe economic downturn of a general nature, on the condition that this does not endanger fiscal sustainability in the medium-term.

3. In the event that the significant deviation from the adjustment path towards the medium term budgetary objective persists or is particularly serious, ▌ the Commission ▌ shall address a recommendation to the Member State concerned to take the necessary adjustment measures. The Council may reject such a Commission recommendation by a qualified majority. The Council ▌shall make the recommendation public. The European Parliament may invite the Member State concerned to explain its policies before its competent committee."

6.          Article 7 is amended as follows:

(a)     paragraph 1 is replaced by the following:

"1. Each Member State with a derogation shall submit to the Council and the Commission information necessary for the purpose of multilateral surveillance of regular intervals under Article 121 TFEU in the form of a convergence programme, which provides an essential basis for the sustainability of public finances which is conducive to price stability, strong sustainable growth and employment creation."

(b)    paragraph 2 is amended as follows:

(i)     point (a) is replaced by the following:

"(a) the medium-term budgetary objective and the adjustment path towards this objective for the general government balance as a percentage of GDP, the expected path of the general government debt ratio, the planned growth path of government expenditure, including the corresponding allocation for gross fixed capital formation, in particular bearing in mind the conditions and criteria to establish the expenditure growth under Article 9(1), the planned growth path of government revenue at unchanged policy and a quantification of the planned discretionary revenue measures, the medium-term monetary policy objectives, the relationship of those objectives to price and exchange rate stability and to the achievement of sustained convergence;"

(ia)      the following point is inserted:

"(aa) the expected path of the general government debt ratio, as well as information on any implicit or contingent liabilities, such as the expected budgetary costs of ageing and public guarantees, the exact nature of that information being set out in a harmonised framework to be established by the Commission;"

(ib)      the following point is inserted:

"(ab) information on the consistency of the stability programme with the broad economic policy guidelines the employment guidelines and the national reform programme;"

(ic)      point (b) is replaced by the following:

"(b) the main assumptions about expected economic developments and important economic variables which are relevant to the realisation of the convergence programme, such as government investment expenditure, real GDP growth, employment and inflation;"

(ii)       point (c) is replaced by the following:

"(c) a quantitative assessment of the budgetary and other economic policy measures being taken or proposed to achieve the objectives of the programme, comprising a cost-benefit analysis of major structural reforms, which have direct long-term positive budgetary effects, including by raising potential sustainable growth;"

(ba)  the following paragraph is inserted:

"2a. The convergence programme shall be based on realistic and cautious macroeconomic and budgetary forecasts using the most up-to-date information. Budgetary planning shall be based on the most likely macro-fiscal scenario or on a more prudent scenario that highlights in detail deviations from the most likely macro-fiscal scenario. The macroeconomic and budgetary forecasts shall be prepared taking into account the Commission forecasts and those of other independent bodies as appropriate. Significant divergences between the chosen macro-fiscal scenario and the Commission forecasts shall be explained in the convergence programme."

(c)    paragraph 3 is replaced by the following:

"3. The information about the paths for the general government balance and debt ratio, the growth of government expenditure, the planned growth path of government revenue at unchanged policy, the planned discretionary revenue measures, appropriately quantified, and the main economic assumptions referred to in paragraph 2(a), (aa), (ab) and (b) shall be on an annual basis and shall cover the preceding year, the current year and at least the following three years."

7.          Article 8 is replaced by the following:

"Article 8

1.      Convergence programmes shall be submitted annually between 1 and 30 April.

1a.    For countries whose fiscal year is not equal to the calendar year, submission of the convergence programme will follow presentation of the budget to the national parliament and be as close as possible to its publication.

2.      Member States shall make public their convergence programmes."

8.          Article 9 is replaced by the following:

"Article 9

1. Based on assessments by the Commission and the Economic and Financial Committee, the Council shall, within the framework of multilateral surveillance under Article 121 TFEU, examine the medium-term budgetary objectives presented by the Member States concerned in their convergence programmes, assess whether the economic assumptions on which the programme is based are plausible, whether the adjustment path towards the medium-term budgetary objective is appropriate, including consideration of the accompanying path for the debt ratio, and whether the measures being taken and/or proposed to respect that adjustment path are sufficient to achieve the medium-term budgetary objective over the cycle and to achieve sustained convergence.

The Council and the Commission, when assessing the adjustment path toward the medium-term budgetary objective, shall take into account whether a higher adjustment effort is made in economic good times, whereas the effort may be more limited in economic bad times. For Member States faced with a debt level exceeding 60% of GDP or with pronounced risks of overall debt sustainability, the Council and the Commission shall examine whether the annual improvement of the cyclically-adjusted budget balance, net of one-off and other temporary measures is significantly higher than 0.5% of GDP. For ERM2 Member States, the Council and the Commission shall examine if the Member State concerned pursues an appropriate annual improvement of its cyclically adjusted balance, net of one-off and other temporary measures, required to meet its medium-term budgetary objective, with 0.5% of GDP as a benchmark.

Sufficient progress towards the medium-term budgetary objective shall be evaluated on the basis of an overall assessment with the structural balance as the reference, including an analysis of expenditure net of discretionary revenue measures. To this effect, the Council and the Commission shall assess whether the growth path of government expenditure, taken in conjunction with the effect of measures being taken or proposed on the revenue side, is in accordance with the following conditions:

(a) for Member States that have achieved the medium-term budgetary objective, annual expenditure growth does not exceed a reference medium-term rate of potential GDP growth, unless the excess is matched by discretionary revenue measures;

(b) for Member States that have not yet reached their medium-term budgetary objective, annual expenditure growth does not exceed a rate below a reference medium-term rate of potential GDP growth, unless the excess is matched by discretionary revenue measures. The size of the shortfall of the growth rate of government expenditure compared to a reference medium-term rate of potential GDP growth is set in such a way as to ensure an appropriate adjustment towards the medium-term budgetary objective;

(c) for Member States that have not yet reached their medium-term budgetary objective, discretionary reductions of government revenue items are matched either by expenditure cuts or by discretionary increases in other government revenue items or both.

The expenditure aggregate shall exclude interest expenditure, expenditure on EU programmes fully matched by EU funds revenue and non-discretionary changes in unemployment benefit expenditure.

The excess of expenditure growth over the medium-term references shall not be counted as a breach of the benchmark to the extent that it is fully offset by revenue increases mandated by law.

The reference medium-term rate of potential GDP growth shall be assessed on the basis of forward looking projections or where they do not lead to a slower adjustment path towards the medium-term objective, on the basis of backward looking projections. Projections shall be updated at regular intervals. The Commission shall make public a transparent, independent and reasoned assessment of the methodology of those projections.

When defining the adjustment path to the medium-term budgetary objective for Member States that have not yet reached this objective and in allowing a temporary deviation from this objective for Member States that have already reached it, under the condition that an appropriate safety margin with respect to the deficit reference value is preserved and that the budgetary position is expected to return to the medium-term budgetary objective within the programme period, the Council and the Commission shall take into account the implementation of major structural reforms which have direct long-term positive budgetary effects, including by raising potential sustainable growth, and therefore a verifiable impact on the long-term sustainability of public finances.

Special attention shall be paid to pension reforms introducing a multi-pillar system that includes a mandatory, fully funded pillar. Member States implementing such reforms shall be allowed to deviate from the adjustment path to their medium-term budgetary objective or from the objective itself, with the deviation reflecting the net cost of the reform to the publicly managed pillar, under the condition that the deviation remains temporary and that an appropriate safety margin with respect to the deficit reference value is preserved.

The Council and the Commission shall furthermore examine whether the contents of the convergence programme facilitate the closer coordination of economic policies and whether the economic policies of the Member State concerned are consistent with the broad guidelines of economic policies and the employment guidelines of the Member States and of the Union. In addition, for ERM2 Member States, the Council and the Commission shall examine whether the content of the convergence programme ensure a smooth participation in the exchange rate mechanism.

In case of an unusual event outside the control of the Member State concerned and which has a major impact on the structural balance of the general government of at least 0.5% of GDP in one single year or in periods of severe economic downturn for the euro area or the EU as a whole Member States may exceptionally be allowed to temporarily depart from the adjustment path towards the medium-term objective referred to in the third subparagraph, on condition that this does not endanger fiscal sustainability in the medium-term.

2. The Council shall carry out the examination of the convergence programme within at most three months of the submission of the programme. The Council, on a recommendation from the Commission and after consulting the Economic and Financial Committee, shall, if necessary, deliver an opinion on the programme. Where the Council, in accordance with Article 121 TFEU, considers that the objectives and the content of the programme should be strengthened with particular reference to the adjustment path towards the medium-term budgetary objective, the Council shall, in its opinion, invite the Member State concerned to adjust its programme."

9.          Article 10 is replaced by the following:

"Article 10

1. As part of multilateral surveillance in accordance with Article 121(3) TFEU, the Council and the Commission shall monitor the implementation of convergence programmes, on the basis of information provided by Member States with a derogation and of assessments by the Commission and the Economic and Financial Committee, in particular with a view to identifying actual or expected significant divergences of the budgetary position from the medium-term budgetary objective, or from the appropriate adjustment path towards it, ensuing from deviations from prudent fiscal-policy making.

In addition, the Council and the Commission shall monitor the economic policies of Member States with a derogation in the light of convergence programme objectives with a view to ensure that their policies are geared to stability and thus to avoid real exchange rate misalignments and excessive nominal exchange rate fluctuations.

2. In the event of a significant deviation from the adjustment path towards the medium-term objective referred to in the third subparagraph of Article 9(1) of this Regulation, and in order to prevent the occurrence of an excessive deficit, the Commission, in accordance with Article 121(4) TFEU, shall address a warning to the Member State concerned. Such a warning shall be made public. The European Parliament may invite the Member State concerned to explain its policies before its competent committee. In the event of such a significant deviation, the Commission may require additional reporting from the Member State concerned.

The Council shall, within one month of any significant deviation as referred to in the first subparagraph, adopt a recommendation for policy measures setting a deadline of no more than five months for addressing the deviation, on the basis of a Commission recommendation. In the event of a particularly significant deviation or in a particularly serious situation, the deadline shall be no more than three months. The Council, on a proposal from the Commission, shall make the recommendation public.

The Commission shall monitor the measures contained in the recommendation on the basis of surveillance visits in accordance with Article -11 of this Regulation and prepare a report to the Council. That report shall be made public within one month.

If the Member State concerned fails to take appropriate action within the deadline specified in a Council recommendation under the second subparagraph, the Commission shall immediately recommend to the Council to establish that there has been no effective action. The decision shall be deemed adopted by the Council unless it decides by qualified majority to reject the recommendation within ten days of the Commission adopting it. At the same time, the Council, on a proposal from the Commission, shall address a formal report to the European Council.

The process from the Council recommendation referred to in the second subparagraph to the final Council recommendation and report to the European Council referred to in the fourth subparagraph shall be no longer than six months.

A deviation from the medium-term objective or the appropriate adjustment path towards it shall be evaluated on the basis of an overall assessment with the structural balance as the reference, including an analysis of expenditure net of discretionary revenue measures as defined in Article 9(1).

The assessment of whether the deviation is significant shall notably include the following criteria:

For a Member State that has not reached the medium-term budgetary objective, when assessing the change in the structural balance, the deviation shall be considered significant if it is at least 0.5% of GDP in one single year or at least 0.25% of GDP on average per year in two consecutive years; when assessing expenditure developments net of discretionary revenue measures, whether the deviation has a total impact on the government balance of at least 0.5% of GDP in one single year or cumulatively in two consecutive years.

The deviation shall not be considered if the Member State concerned has significantly overachieved the medium-term budgetary objective, taking into account the presence of excessive macroeconomic imbalances, and the budgetary plans laid out in the stability programme do not jeopardise this objective over the programme period.

The deviation may be equally not considered when resulting from an unusual event outside the control of the Member State concerned and which has a major impact on the structural balance of the general government of at least 0,5% of GDP in one year or in case of severe economic downturn of a general nature, on the condition that this does not endanger fiscal sustainability in the medium-term.

3. In the event that the significant deviation from the adjustment path towards the medium term budgetary objective persists or is particularly serious, the ▌Commission, shall address a recommendation to the Member State concerned to take the necessary adjustment measures. The Council ▌shall make the recommendation public. The European Parliament may invite the Member State concerned to explain its policies before its competent committee.

3a. Whenever there is an invitation to a meeting between the competent committee of the European Parliament and a Member State to explain a position, required action or divergence from the requirements herein, the meeting shall be convened under the auspices of one of:

(a) the European Parliament;

(b) the parliament of the Member State concerned

(c) the parliament of the rotating Presidency."

9a.        The following article is inserted:

"Article -11

1. The Commission shall ensure a permanent dialogue with authorities of the Member States in accordance with the objectives of this Regulation. To that end, the Commission shall carry out, in all Member States, visits for the purpose of regular dialogue and, where appropriate, surveillance.

The Commission may invite representatives of the European Central Bank, if it deems it appropriate, or other relevant institutions to participate in dialogue and surveillance visits.

2. When organising dialogue or surveillance visits, the Commission shall, if appropriate, transmit its provisional findings to the Member States concerned for comments.

3. The Commission shall, in the context of dialogue visits, review the actual economic situation in the Member State and shall identify any risks or difficulties in complying with the objectives of this Regulation.

4. The Commission shall, in the context of surveillance visits, monitor the processes and verify that measures have been taken in accordance with decisions of the Council or the Commission in accordance with the objectives of this Regulation. Surveillance visits shall be undertaken only in exceptional cases and only where there are discernible risks or difficulties in achieving those objectives.

5. The Commission shall inform the Economic and Financial Committee of the reasons for surveillance visits.

6. Member States shall take all necessary measures to facilitate dialogue and surveillance visits. Member States shall provide, at the request of the Commission, the assistance of all the relevant national authorities for the preparation for and conduct of dialogue and surveillance visits."

9b.        Article 11 is replaced by the following:

"Article 11

As part of the multilateral surveillance described in this Regulation, the Council and the Commission shall carry out the overall assessment described in Article 121(3) TFEU."

9c.         The following article is inserted:

"Article 11a

The European Parliament and the Council shall assess the implementation of this Regulation on the basis of an annual report by the Commission."

9d.        The following article is inserted:

"Article 12a

Review

1. By ...* and every three years thereafter the Commission shall publish a report on the application of this Regulation.

2. The report and any accompanying proposals shall be forwarded to the European Parliament and the Council.

3. If the report identifies obstacles to the proper functioning of the provisions in the Treaties governing economic and monetary union it shall make the necessary recommendations to the European Council.

4. The report shall include a proposal for the extension of reversed qualified majority voting in Council to all steps of the procedure referred to in this Regulation.

5. By ... *, the Commission shall present a report to the European Parliament and to the Council accompanied, where appropriate, by legislative proposals to establish, under Union rules, an incentive mechanism aiming at granting guarantees to a set of EU2020 project bonds initiatives.

*OJ please insert date: one year after the date of entry into force of this Regulation."

10.        All references to 'Article 99' shall be replaced throughout the Regulation by references to 'Article 121'.

Article 2

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at

For the European Parliament                                       For the Council

The President                                                         The President

(1)

Not yet published in the Official Journal.

(2)

* Amendments: new or amended text is highlighted in bold italics; deletions are indicated by the symbol ▌.


OPINION OF THE COMMITTEE ON LEGAL AFFAIRS ON THE LEGAL BASIS

Mrs Sharon Bowles

Chair

Committee on Economic and Monetary Affairs

BRUSSELS

Subject:           Opinion on the legal basis of the proposal for a Regulation of the European Parliament and of the Council on amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (COM(2010)0526 – C7-0300/2010 – 2010/0280(COD))

Dear Mrs Bowles,

By letter of 4 March 2011 you asked the Committee on Legal Affairs pursuant to Rule 37(2) of the Rules of Procedure, to give its opinion on the appropriate legal basis of various proposals for legislation, on which amendments to change the legal basis have been tabled in your committee as the lead committee and/or in the Committee on Employment and Social Affairs.

The committee considered this question at its meeting of 12 April 2011.

The economic governance package aims at responding to the need for greater coordination and closer surveillance of economic policies in the Economic and Monetary Union.

The package consists of six proposals for legislation.

The proposals are analysed separately in the annex. For the sake of convenience, the committee's conclusions as to the appropriate legal basis in each case are set out below:

-Proposal for a Regulation of the Parliament and of the Council on the prevention and correction of macroeconomic imbalances ((COM (2010) 527, 2010/0281 (COD)).

The sole purpose of the proposal for a Regulation is to broaden the economic surveillance procedure, as allowed by Article 121(6) TFUE. This legal basis thus seems to be the appropriate one.

- Proposal for a Council Directive on requirements for budgetary frameworks of the Member States (COM (2010) 523 final, 2010/ 0277 (NLE))

The main purpose of this proposal is to encourage fiscal responsibility by setting minimum requirements for national frameworks and to ensure the effectiveness of the excessive deficit procedure. Therefore, the legal basis proposed by the Commission, namely the third subparagraph of Article 126(14) TFEU, seems to be appropriate.

-Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies ((COM (2010) 526, 2010/0280 (COD))

This proposal aims at securing strengthened coordination of Member States' economic policies. It therefore seems that Article 121(6) TFEU is the appropriate legal basis for this proposal.

- Proposal for a Council Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (COM (2010) 522 final, 2010/0276 (CNS))

In view of the fact that the main objective of this proposal is to fix the detailed rules to be followed when applying the excessive deficit procedure, the sole appropriate legal basis is Article 126(14) TFEU.

- Proposal for a Regulation of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (COM (2010)0524, 2010/0278(COD))

It is considered that Article 121(6) in conjunction with Article 136 TFEU constitutes the appropriate legal basis.

- Proposal for a Regulation of the Parliament and of the Council on enforcement measures to correct excessive macroeconomic imbalances in the euro area ((COM 2010) 525, 2010/0279 (COD))

Considering the purpose of the proposal, which aims at reinforcing the effective correction of macroeconomic imbalances in the euro area, Article 121(6) in conjunction with Article 136 TFEU constitutes the appropriate legal basis.

At its meeting of 12 April 2011 the Committee on Legal Affairs decided on the above recommendations, unanimously(1).

Yours sincerely,

Klaus-Heiner Lehne

Annex

Subject: Legal basis of the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies ((COM (2010) 526, 2010/0280 (COD)).

The economic and financial crisis has exposed the need to review the framework for the Economic and Monetary Union (EMU) in order to enforce the existing instruments and to broaden the procedures for coordination and multilateral surveillance. As the Commission stresses in its Explanatory Memorandum, the system must be strengthened in order to "anchor macroeconomic stability and the sustainability of public finances, which are preconditions for durable output and employment growth"(2).

The economic governance package comprises six proposals aiming at reinforcing the coordination and the surveillance of economic policies in the EMU in the context of the Europe 2020 Strategy and the European semester, a new surveillance cycle which brings together process under the SGP (The Stability and Growth Pact(3)) and the Broad Economic Policy Guidelines.

Two of the proposals in question are concerned with the excessive deficit procedure. Both of them are based on Article 126(14) TFEU. The other four concern the multilateral surveillance procedure and are based on Article 121(6); two of them are based on Article 121(6) in combination with Article 136 TFEU.

The proposals follow two communications(4) of the Commission and an agreement of the European Council of June 2010 on the need to reinforce the coordination of the Member States' economic policies. The economic governance package was submitted on 29 September 2010.

The proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (hereinafter the proposal) is in the course of first reading before the Committee on Economic and Monetary Affairs (ECON), as lead committee. The Rapporteur is Corien Wortmann-Kool. The Committee an Employment and Social Affairs has given an opinion (rapporteur: Pervenche Berès.

By letter of 4 March 2011, the Committee on Monetary and Economic Affairs asked the Committee on Legal Affairs pursuant to Rule 37(2) of the Rules of Procedure, to give its opinion on the legal basis. Amendments have been tabled to change the legal basis from the single basis of Article 126(6) to a multiple basis of Article 126(6) in combination with Article 148 (3) and (4) or Article 121(6) in combination with Article 136 TFEU.

Background

Council Regulation (EC) No 1466/ 97, the so-called preventive part of the SGP, was amended in 2005 by Regulation (EC) No 1055/2005 and complemented by the Council Report of 20 March 2005 on "Improving the implementation of Stability and Growth Pact". The proposal under examination seeks to make further amendments to this regulation.

Regulation No 1466/97 sets out provisions ensuring the pursuit of prudent fiscal policies and the sustainability of public finance by Member States.

To achieve these objectives, it requires that Member States "should achieve and maintain a medium-term budgetary objective (MTO) and submit stability and convergence programme to that effect" (recital 4). MTOs are defined as a percentage of the GDP and are differentiated across Member States around a close-to-balance position. Members not having reached their MTO are expected to converge towards it at a certain annual pace.

Despite this precise framework, the actual economic context shows that progress towards achieving MTOs has been generally insufficient. Moreover, the structural balance has in practice proved an insufficient measure of a country`s underlying fiscal position.

According to the Explanatory Memorandum(5), a reform of the preventive part of the SGP is necessary in order to rectify these weaknesses. Consequently, the proposal focuses on the following measures:

- The current MTOs and the 0.5% of GDP annual convergence requirement are to become operational in terms of a new principle of prudent fiscal policy-making. This implies that annual expenditure should not exceed a prudent medium-term rate of growth of GDP.

The Council should be obliged to monitor "the medium term budgetary objectives presented by Member States concerned" (Articles 9 and 10).

- Failure to respect these provisions makes the Member State concerned liable to a warning from the Commission (Article 6).

- In case of persistent or particularly serious failure, the Council may address to the Member State a recommendation to take corrective action under Article 121 of the Treaty. This Recommendation could be made public (Article 6).

It follows that the proposed regulation provides for detailed rules in order to ensure coordination of economic policies and economic performance of Member States.

Proposed legal bases

Article 121(6)

6. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, may adopt detailed rules for the multilateral surveillance procedure referred to in paragraphs 3 and 4(6).

Article 136

1.        In order to ensure the proper functioning of economic and monetary union, and in accordance with the relevant provisions of the Treaties, the Council shall, in accordance with the relevant procedure from among those referred to in Articles 121 and 126, with the exception of the procedure set out in Article 126(14), adopt measures specific to those Member States whose currency is the euro:

(a)    to strengthen the coordination and surveillance of their budgetary discipline;

(b)    to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.

2.        For those measures set out in paragraph 1, only members of the Council representing Member States whose currency is the euro shall take part in the vote.

A qualified majority of the said members shall be defined in accordance with Article 238(3) (a).

Article 148(3) and (4)

3. Each Member State shall provide the Council and the Commission with an annual report on the principal measures taken to implement its employment policy in the light of the guidelines for employment as referred to in paragraph 2.

4. The Council, on the basis of the reports referred to in paragraph 3 and having received the views of the Employment Committee, shall each year carry out an examination of the implementation of the employment policies of the Member States in the light of the guidelines for employment. The Council, on a recommendation from the Commission, may, if it considers it appropriate in the light of that examination, make recommendations to Member States.

Approach of the Court of Justice

It is settled case-law that, in principle, a measure is to be founded on only one legal basis. If examination of the aim and the content of a Union measure reveals that it pursues a twofold purpose or that it has a twofold component, falling within the scope of different bases, and if one is identifiable as the main or predominant purpose or component, whereas the other is merely incidental, the measure must be based on a single basis, namely that required by the main or predominant purpose or component.(7)

Only if, exceptionally, it is established that the measure simultaneously pursues a number of objectives or has several components that are indissociably linked, without one being secondary and indirect in relation to the other, will that measure have to be founded on the various corresponding legal bases(8).

Analysis of the legal bases proposed

According to recital 4, the main purpose of the proposed Regulation is to ensure that Member States "achieve and maintain a medium-term budgetary objective and submit stability and convergence programme to that effect". It is therefore clear that the proposal aims at ensuring strict coordination of the Member States’ economic policies.

Further analysis of the provisions of the proposal supports the same conclusion. Article 5 provides for detailed rules on the principle of prudent fiscal policy, Article 6 imposes on the Council a duty to monitor the implementation of stability programmes and Articles 7-10 set out rules in case of exemptions accorded to the Member States.

All the above measures seem to constitute detailed rules for a more integrated multilateral surveillance procedure, as allowed by Article 121(6) TFEU.

Therefore Article 121(6) TFEU is the appropriate legal basis for this proposal.

Carrying on with the analysis, it is necessary to determine whether the objectives of the proposal under examination could justify a multiple legal basis. As we have seen, the Court of Justice is strict on this matter.

Firstly, one must note that Article 148 is part of Title IX, Employment. This provision allows the Council, on a proposal from the Commission and after consulting the European Parliament, to adopt guidelines which Member States should take into account in their employment policies.

Article 148(3) and (4) allows the Council to examine "the implementation of the employment policies of the Member States in the light of the guidelines for employment" and to make recommendations to Member States. It does not constitute a legal basis for the adoption of legislation stricto sensu.

In view of all this, Article 148 does not constitute an appropriate legal basis.

Secondly, the question whether Article 136 TFEU could be an appropriate legal basis can be answered briefly. Given that the proposed measure is intended to apply to all Member States, Article 136 is inappropriate as it applies only to euro zone States.

Conclusion and recommendation

In the light of the above considerations it seems that Article 121(6) TFEU is the appropriate legal basis for this proposal.

(1)

The following were present for the final vote: Klaus-Heiner Lehne (Chair), Evelyn Regner (Vice-Chair), Piotr Borys, Sergio Gaetano Cofferati, Christian Engström, Lidia Joanna Geringer de Oedenberg, Sajjad Karim, Kurt Lechner, Eva Lichtenberger, Antonio López-Istúriz White, Arlene McCarthy, Antonio Masip Hidalgo, Alajos Mészáros, Angelika Niebler, Bernhard Rapkay, Alexandra Thein, Diana Wallis, Rainer Wieland, Cecilia Wikström, Tadeusz Zwiefka.

(2)

Proposal for a Council Regulation (EU) amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure, Explanatory Memorandum.

(3)

The SGP consists of Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure and the Resolution of the European Council of 17 June 1997 on the Stability and Growth Pact.

(4)

Reinforcing economic policy coordination of 12 May 2010; Enhancing economic policy coordination for stability, growth and jobs - Tools for stronger EU governance of 30 June 2010.

(5)

See note 1.Explanatory Memorandum.

(6)

Article 121 TFEU

3. In order to ensure closer coordination of economic policies and sustained convergence of the economic performances of the Member States, the Council shall, on the basis of reports submitted by the Commission, monitor economic developments in each of the Member States and in the Union as well as the consistency of economic policies with the broad guidelines referred to in paragraph 2, and regularly carry out an overall assessment. For the purpose of this multilateral surveillance, Member States shall forward information to the Commission about important measures taken by them in the field of their economic policy and such other information as they deem necessary.

4. Where it is established, under the procedure referred to in paragraph 3, that the economic policies of a Member State are not consistent with the broad guidelines referred to in paragraph 2 or that they risk jeopardising the proper functioning of economic and monetary union, the Commission may address a warning to the Member State concerned. The Council, on a recommendation from the Commission, may address the necessary recommendations to the Member State concerned. The Council may, on a proposal from the Commission, decide to make its recommendations public.

Within the scope of this paragraph, the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned.

A qualified majority of the other members of the Council shall be defined in accordance with Article 238(3)(a).

(7)

Case- 91/05 Commission v. Council [2008] ECR I- 3651.

(8)

Case C-338/01 Commission v. Council [2004] ECR I- 4829.


OPINION of the Committee on Employment and Social Affairs (18.3.2011)

for the Committee on Economic and Monetary Affairs

on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

(COM(2010)0526 – C7-0300/2010 – 2010/0280(COD))

Rapporteur: Pervenche Berès

SHORT JUSTIFICATION

Background

On 29 September 2010, the Commission presented a legislative package aimed at reinforcing the economic governance in the EU and the euro area. The package is made up of six proposals: four of them deal with fiscal issues, including a reform of the Stability and Growth Pact (SGP), while two new regulations aim at detecting and addressing emerging macroeconomic imbalances within the EU and the euro area.

The Commission proposes to reinforce Member States' compliance with the SGP and to deepen fiscal policy coordination. Under the so-called preventive arm of the SGP, the existing Regulation 1466/97 on "strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies" is amended in order to ensure that Member States follow "prudent" fiscal policies in good times to build up the necessary buffer for bad times. In addition, under the so-called corrective arm, amendments to Regulation 1467/97 concerning the "implementation of the excessive deficit procedure" are proposed to ensure that debt developments are followed more closely and put on an equal footing with deficit developments.

Furthermore, a Directive introducing requirements for budgetary frameworks of the Member States is proposed to encourage fiscal responsibility by setting minimum requirements for national fiscal frameworks and ensuring they are in line with Treaty obligations. To back up the changes in the preventive and corrective arms of the SGP, the Commission also proposed strengthening the enforcement mechanisms for the euro area Member States.

Observations

This draft opinion concerns the Commission’s proposal to amend Regulation 1466/97 on the "strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies". Your rapporteur agrees that the SGP, both in its preventive and corrective part, has failed and needs to be reformed. The reform should build on experience gained during the years of its existence, including the current economic and social crises. However, your rapporteur finds the Commission’s proposal for the reform of the preventive part of the SGP to fall short in several aspects, and therefore proposes amendments to address the following main aspects:

- The EU’s framework for the budgetary surveillance and for the surveillance and coordination of economic policies should be broadened so as to include employment and social aspects. Article 148 of the Treaty should therefore be added as a legal base in the preventive part of the surveillance framework.

- Linked to the above, the instruments based on Article 148 of the Treaty, in particular the guidelines for the employment policies of the Member States should be taken into account by Member States presenting their respective stability and convergence programmes, as well as during the examination of those programmes. The Employment Committee (EMCO) and the Social Protection Committee (SPC) should thus be actively involved in all relevant surveillance procedures.

- The multilateral surveillance of the stability and convergence programmes should be conducted as part of the European Semester which should be included in the Regulation, and should be conducted together with the surveillance of macroeconomic and social imbalances and the examination of the implementation of the broad guidelines for the economic policies and of the guidelines for the employment policies.

- The stability and convergence programmes of the Member States should include information on the consistency of the Member States’ budgetary objectives with the EU’s growth and jobs strategy, such as the Europe 2020 strategy, and in particular with the broad economic policy guidelines and the guidelines for the employment policies.

- A temporary departure from fiscal policy-making - that the rapporteur prefers to qualify as efficient instead of prudent which lacks any definition - as defined in the Regulation should be allowed not only in case of severe economic but also social downturn.

- The possibility for Member States implementing structural reforms to deviate from their respective medium-term budgetary objectives should not be linked to pension reforms aiming at the promotion of certain models. Instead, such as possibility should be allowed to the Member States implementing structural reforms which contribute to the job preservation or creation and to reduction of poverty.

Finally, your rapporteur considers it of utmost importance that the strengthening of the economic governance goes hand in hand with reinforcing the democratic legitimacy of the European governance. In this respect, the role of the European Parliament should be strengthened in the whole surveillance process. In addition, regular consultation of the social partners and a stronger involvement of National Parliaments are necessary preconditions of a credible and transparent surveillance framework.

AMENDMENTS

The Committee on Employment and Social Affairs calls on the Committee on Economic and Monetary Affairs, as the committee responsible, to incorporate the following amendments in its report:

Amendment  1

Proposal for a regulation – amending act

Citation 1

Text proposed by the Commission

Amendment

- Having regard to the Treaty on the Functioning of the European Union, and in particular Article 121(6) thereof,

- Having regard to the Treaty on the Functioning of the European Union, and in particular Article 121(6), in combination with Article 148(3) and (4), thereof,

Amendment  2

Proposal for a regulation – amending act

Recital 1 a (new)

Text proposed by the Commission

Amendment

 

(1a) In order to develop a coordinated strategy for employment, as provided for by the Treaty on the Functioning of the European Union (TFEU), Member States and the Union should comply with the guiding principles of promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change.

Amendment  3

Proposal for a regulation – amending act

Recital 1 b (new)

Text proposed by the Commission

Amendment

 

(1b) The measures adopted under this Regulation should be fully consistent with the horizontal provisions of the TFEU, namely Articles 7, 8, 9, 10 and 11 TFEU, with Article 153(5) TFEU, and with the Protocol (No 26) on services of general interest annexed to the Treaty on European Union and to the TFEU.

Amendment  4

Proposal for a regulation – amending act

Recital 1 c (new)

Text proposed by the Commission

Amendment

(1c) The TFEU provides that in defining and implementing its policies and activities, the Union take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection and the fight against social exclusion.

Amendment  5

Proposal for a regulation – amending act

Recital 3

Text proposed by the Commission

Amendment

(3) The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth underpinned by financial stability and conducive to employment creation.

(3) The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth underpinned by financial stability and conducive to employment creation and should, therefore, enhance long term investments for smart, sustainable and inclusive growth.

Amendment  6

Proposal for a regulation – amending act

Recital 5

Text proposed by the Commission

Amendment

(5) The content of the stability and convergence programmes as well as the criteria for their examination should further be adapted in the light of the experience gained with the implementation of the Stability and Growth Pact.

(5) The content of the stability and convergence programmes as well as the procedure and criteria for their examination should further be developed and discussed both at national and at the Union level in the light of the experience gained with the implementation of the Stability and Growth Pact, in particular regarding its contribution to growth and job creation and to the Union's competitiveness and convergence.

Amendment  7

Proposal for a regulation – amending act

Recital 5 a (new)

Text proposed by the Commission

Amendment

(5a) Strengthening economic governance should go hand in hand with reinforcing the democratic legitimacy of economic governance in the Union, which should be achieved through a closer and a more timely involvement of the European Parliament and the national parliaments throughout the economic policy coordination procedures, with full use of the tools provided for by the TFEU, in particular the broad guidelines for the economic policies of the Member States and of the Union and the guidelines for the employment policies of the Member States.

Amendment  8

Proposal for a regulation – amending act

Recital 6

Text proposed by the Commission

Amendment

(6) Adherence to the medium-term budgetary objective of budgetary positions should allow Member States to have a safety margin with respect to the 3% of GDP reference value in order to ensure rapid progress towards sustainability and to have room for budgetary manoeuvre, in particular taking into account the needs of public investment.

(6) Adherence to the medium-term budgetary objective of budgetary positions should allow Member States to have a safety margin with respect to the 3% of GDP reference value in order to ensure sustainable public finances and a rapid progress towards sustainability, while leaving room for budgetary manoeuvre, in particular taking into account the needs of public investment conducive to the achievement of the Union’s growth and jobs objectives and to improving competitiveness and convergence of its Member States.

Amendment  9

Proposal for a regulation – amending act

Recital 6 a (new)

Text proposed by the Commission

Amendment

(6a) The Council, when examining and monitoring the stability programmes and the convergence programmes and in particular their medium-term budgetary objectives or the targeted adjustment paths towards those objectives, should take into account the relevant cyclical and structural characteristics of the economy of each Member State and its spill-over effects to other Member States’ economies.

Amendment  10

Proposal for a regulation – amending act

Recital 7

Text proposed by the Commission

Amendment

(7) The obligation to achieve and maintain the medium-term budgetary objective needs to be put into operation, through the specification of principles of prudent fiscal policy-making.

deleted

Amendment  11

Proposal for a regulation – amending act

Recital 7 a (new)

Text proposed by the Commission

Amendment

(7a) A symmetrical approach to efficient fiscal policy-making over the cycle through enhanced budgetary discipline in economic good times should be achieved, with the objective of allowing contra-cyclical policies and to reach, gradually, the medium-term budgetary objective. Compliance with the medium-term budgetary objective should allow Member States to deal with normal cyclical fluctuations while keeping the government deficit below the 3 % GDP reference value and ensure rapid progress towards fiscal sustainability. Taking this into account, the medium-term budgetary objective should allow room for budgetary manoeuvre, in particular for public investment conducive to the achievement of the Union’s growth and jobs objectives.

Amendment  12

Proposal for a regulation – amending act

Recital 8 a (new)

Text proposed by the Commission

Amendment

 

(8a) In order to enhance national ownership of the Stability and Growth Pact, national budgetary frameworks should be fully aligned with the objectives of multilateral surveillance in the Union, and in particular with the European semester for policy coordination, in the context of which the national parliaments and all other relevant stakeholders, in particular the social partners, should be informed in a timely manner and should be duly involved.

Amendment  13

Proposal for a regulation – amending act

Recital 9

Text proposed by the Commission

Amendment

(9) Prudent fiscal policy-making implies that the growth rate of government expenditure does normally not exceed a prudent medium-term growth rate of GDP, increases in excess of that norm are matched by discretionary increases in government revenues and discretionary revenue reductions are compensated by reductions in expenditure.

(9) Efficient and sustainable fiscal policy-making implies compliance with a set of revenue side and expenditure side rules where growth in structural fiscal revenues excluding windfall, cyclically driven and one off measures should normally not fall behind the medium growth rate of GDP over the business cycle. The growth rate of government expenditure normally does not exceed a medium-term growth rate of GDP over the business cycle, discretionary increases in excess of that norm on expenditure or discretionary reductions in tax revenues are matched by accompanying other discretionary measures, either on the side of expenditure and/or on the side of tax revenues. Sustainable fiscal policy making involves taking proper and explicit account as aggravating or mitigating factors within the meaning of Regulation (EC) No 1467/97 of long-term determinants of economic sustainability such as social inclusion, environmental externalities, in particular climate change, as well as the costs related to the internalisation of other negative externalities which represent a burden for future generations.

Amendment  14

Proposal for a regulation – amending act

Recital 10

Text proposed by the Commission

Amendment

(10) A temporary departure from prudent fiscal policy-making should be allowed in case of severe economic downturn of a general nature in order to facilitate economic recovery.

(10) A temporary departure from efficient and sustainable fiscal policy-making should be exceptionally allowed in case of a severe economic downturn or a severe rise in unemployment, including the period in which the economy is operating below its normal potential, in order to facilitate economic recovery.

Amendment  15

Proposal for a regulation – amending act

Recital 11

Text proposed by the Commission

Amendment

(11) In the event of a significant deviation from prudent fiscal-policy a warning should be addressed to the Member State concerned and in case the significant deviation persists or is particularly serious, a recommendation should be addressed to the Member State concerned to take the necessary corrective measures.

(11) In the event of a significant deviation from efficient and sustainable fiscal-policy a warning should be addressed to the Member State concerned and in case the significant deviation persists or is particularly serious, a recommendation should be addressed to the Member State concerned to take the necessary corrective measures.

Amendment  16

Proposal for a regulation – amending act

Recital 12

Text proposed by the Commission

Amendment

(12) In order to ensure compliance with the fiscal surveillance framework of the Union for participating Member States, a specific enforcement mechanism should be established on the basis of Article 136 of the Treaty for cases where a persistent and significant deviation from prudent fiscal policy making prevails.

(12) In order to ensure compliance with the fiscal surveillance framework of the Union for participating Member States, a specific enforcement mechanism should be established on the basis of Article 136 TFEU for cases where a persistent and significant deviation from efficient and sustainable fiscal policy making, lack of action or an unwillingness to cooperate prevail.

Amendment  17

Proposal for a regulation – amending act

Article 1 – point 1 a (new)

Regulation (EC) No 1466/97

Article -2 a (new) (before Section 1A)

 

Text proposed by the Commission

Amendment

 

1a. The following article is inserted:

 

"Article -2a

 

Multilateral surveillance by the Council shall be conducted as part of a European semester for policy coordination (Semester) in line with the provisions of this Regulation and the requirement that Member States regard their economic policies and promote employment as a matter of common concern and that they coordinate their policies and action in this respect within the Council in accordance with the objectives set out in Articles 120 and 146 TFEU.

 

The Semester shall, inter alia, consist of the multilateral surveillance of the stability and convergence programmes as under this Regulation, the prevention and correction of macroeconomic and social imbalances under Regulation (EU) No .../2011, the excessive deficit procedure under Regulation (EC) No 1467/97 and the formulation of the broad guidelines for the economic policies of the Member States and of the Union in accordance with Article 121(2) TFEU and the guidelines for the employment policies that Member States shall take into account in accordance with Article 148(2) TFEU, the implementation of those guidelines, and the annual policy orientations deriving from the annual economic and social summit within the framework of the strategy the Union defines.

 

The European Parliament and the national parliaments shall be duly involved in the Semester in order to increase transparency, ownership and accountability of any decisions taken. In order to ensure adequate involvement of the European Parliament, an inter-institutional agreement between the European Parliament, the European Council, the Council and the Commission shall be concluded by 31 December 2011. That procedural agreement shall be reviewed every three years and amended if appropriate.

 

The Economic and Financial Committee established pursuant to Article 134 TFEU, the Employment Committee established pursuant to Article 150 TFEU and the Social Protection Committee established pursuant to Article 160 TFEU shall be consulted wherever appropriate.

 

The relevant stakeholders, in particular the social partners, shall be consulted, within the framework of the Semester, on all the main policy formulations to be discussed by the Union institutions."

Amendment  18

Proposal for a regulation – amending act

Article 1 – point 2 – point a

Regulation (EC) No 1466/97

Article 3 – paragraph 1

 

Text proposed by the Commission

Amendment

1. Each participating Member State shall submit to the Council and Commission information necessary for the purpose of multilateral surveillance at regular intervals under Article 121 of the Treaty in the form of a stability programme, which provides an essential basis for price stability and for strong sustainable growth conducive to employment creation.

1. Each participating Member State shall submit to the Council and Commission information necessary for the purpose of multilateral surveillance at regular intervals under Article 121 of the Treaty in the form of a stability programme, which provides an essential basis for price stability, competitiveness and convergence and for strong sustainable growth conducive to employment creation.

Amendment  19

Proposal for a regulation – amending act

Article 1 – point 2 – point b – point i a (new)

Regulation (EC) No 1466/97

Article 3 – paragraph 2 – point a a (new)

 

Text proposed by the Commission

Amendment

 

(ia) the following point is inserted:

 

"(aa) information on the consistency of the medium-term budgetary objective with the Union’s growth and jobs objectives, the broad guidelines for the economic policies of the Member States and of the Union and the guidelines for the employment policies of the Member States;"

Amendment  20

Proposal for a regulation – amending act

Article 1 – point 2 – point b – point ii

Regulation (EC) No 1466/97

Article 3 – paragraph 2 – point (c)

 

Text proposed by the Commission

Amendment

(c) a quantitative assessment of the budgetary and other economic policy measures being taken or proposed to achieve the objectives of the programme, comprising a cost-benefit analysis of major structural reforms which have direct long-term cost-saving effects, including by raising potential growth;

(c) a quantitative assessment of the budgetary and other economic policy measures being taken or proposed to achieve the objectives of the programme, comprising a cost-benefit analysis of major structural reforms which are conducive to the achievement of the Union’s growth and jobs objectives;

Amendment  21

Proposal for a regulation – amending act

Article 1 – point 2 – point c

Regulation (EC) No 1466/97

Article 3 – paragraph 3

 

Text proposed by the Commission

Amendment

'3. The information about the paths for the general government balance and debt ratio, the growth of government expenditure, the planned growth path of government revenue at unchanged policy, the planned discretionary revenue measures and the main economic assumptions referred to in paragraph 2(a) and (b) shall be on an annual basis and shall cover, the preceding year, the current year and at least the following three years.'

3. The information about the paths for the general government balance and debt ratio, the growth of government expenditure and its contribution to the implementation of the Union’s growth and jobs objectives, the planned growth path of government revenue at unchanged policy, the planned discretionary revenue measures, the paths for growth and indicators of the competitiveness and convergence of the economy and the main economic assumptions referred to in points (a), (aa) and (b) of paragraph 2 shall be on an annual basis and shall cover, the preceding year, the current year and at least the following three years.

Amendment  22

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 1

 

Text proposed by the Commission

Amendment

1. Based on assessments by the Commission and the Economic and Financial Committee, the Council shall, within the framework of multilateral surveillance under Article 121 of the Treaty, examine the medium-term budgetary objectives presented by the Member States concerned, assess whether the economic assumptions on which the programme is based are plausible, whether the adjustment path towards the medium-term budgetary objective is appropriate and whether the measures being taken or proposed to respect that adjustment path are sufficient to achieve the medium-term budgetary objective over the cycle.

1. Based on assessments by the Commission, the Economic and Financial Committee the Employment Committee and the Social Protection Committee, the Council shall, within the framework of multilateral surveillance under Article 121 TFEU and of the examination of the implementation of the employment policies in accordance with Article 148 TFEU, examine the medium-term budgetary objectives and the expected path of the general debt ratio as presented by the Member States concerned in their stability programmes, assess whether the economic assumptions on which the programme is based are plausible, whether the adjustment path towards the medium-term budgetary objective is appropriate and whether the measures being taken or proposed to respect that adjustment path are sufficient to achieve the medium-term budgetary objective over the cycle.

Amendment  23

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 1 a (new)

 

Text proposed by the Commission

Amendment

 

In the case of sudden external shocks of any nature identified by the Commission, the medium-term budgetary objective may be amended by the Council upon the request of the Member State concerned or following a proposal by the Commission.

Amendment  24

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 2

 

Text proposed by the Commission

Amendment

The Council, when assessing the adjustment path toward the medium-term budgetary objective, shall examine if the Member State concerned pursues an appropriate annual improvement of its cyclically-adjusted budget balance, net of one-off and other temporary measures, required to meet its medium-term budgetary objective, with 0.5% of GDP as a benchmark. For Member States with a high level of debt or excessive macroeconomic imbalances or both, the Council shall examine whether the annual improvement of the cyclically-adjusted budget balance, net of one-off and other temporary measures is higher than 0.5% of GDP. The Council shall take into account whether a higher adjustment effort is made in economic good times, whereas the effort may be more limited in economic bad times.

The Council, when assessing the adjustment path toward the medium-term budgetary objective, shall examine if the Member State concerned pursues an appropriate annual improvement of its cyclically-adjusted budget balance, net of one-off and other temporary measures, required to meet its medium-term budgetary objective, with 0,5% of GDP as a benchmark. For Member States with a high level of debt or excessive macroeconomic and social imbalances or both, the Council shall examine whether the annual improvement of the cyclically-adjusted budget balance, net of one-off and other temporary measures is at least 0,5% of GDP. The Council shall take into account whether a higher adjustment effort is made in economic good times, whereas the effort may be more limited in economic bad times.

Amendment  25

Proposal for a regulation – amending act

Article 1 –- point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 3

 

Text proposed by the Commission

Amendment

With a view to ensuring that the medium-term budgetary objective is effectively achieved and maintained, the Council shall verify that the growth path of government expenditure, taken in conjunction with the effect of measures being taken or planned on the revenue side, is consistent with prudent fiscal policy-making.

With a view to ensuring that the medium-term budgetary objective is effectively achieved and maintained, the Council shall verify that the growth path of government expenditure, taken in conjunction with the effect of measures being taken or planned on the revenue side, is consistent with efficient and sustainable fiscal policy making and the Union’s growth and jobs objectives.

Amendment  26

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 4 – introductory part

 

Text proposed by the Commission

Amendment

Fiscal policy-making shall be considered prudent and thereby conducive to the achievement of the medium-term budgetary objective and its maintenance over time if the following conditions are satisfied:

Fiscal policy-making shall be considered efficient and sustainable and thereby conducive to the achievement of the medium-term budgetary objective and its maintenance over time if the following conditions are satisfied:

Amendment  27

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 4 – point a

 

Text proposed by the Commission

Amendment

(a) for Member States that have achieved the medium-term budgetary objective, annual expenditure growth does not exceed a prudent medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures;

(a) for Member States that have achieved the medium-term budgetary objective, annual expenditure growth does not exceed the estimate of efficient and sustainable medium-term rate of GDP growth, whereas growth in tax revenue does not stay behind the growth in government revenue unless the excesses or gaps are matched by discretionary measures in revenue and/or expenditure;

Justification

See ETUC amendment 1. Moreover, the argument that governments can control for expenditure but not for revenue is not correct. Both expenditure as well as revenue strongly interact with the business cycle with a downturn destroying tax revenue in the same way as it is pushing up government expenditure.

Amendment  28

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 4 – point b

 

Text proposed by the Commission

Amendment

(b) for Member States that have not yet reached their medium-term budgetary objective, annual expenditure growth does not exceed a rate below a prudent medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures. The size of the shortfall of the growth rate of government expenditure compared to a prudent medium-term rate of GDP growth is set in such a way as to ensure an appropriate adjustment towards the medium-term budgetary objective;

(b) for Member States that have not yet reached their medium-term budgetary objective, annual expenditure growth does not exceed efficient and sustainable medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures. The size of the difference of the growth rate of government expenditure compared to an efficient and sustainable medium-term rate of GDP growth is set in such a way as to ensure an appropriate adjustment towards the medium-term budgetary objective;

Amendment  29

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 5

 

Text proposed by the Commission

Amendment

The prudent medium-term of growth should be assessed on the basis of projections over a ten-year horizon updated at regular intervals.

The efficient and sustainable medium-term of growth should be assessed on the basis of projections over a ten-year horizon updated at regular intervals.

Amendment  30

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 6

 

Text proposed by the Commission

Amendment

When defining the adjustment path to the medium-term budgetary objective for Member States that have not yet reached this objective and in allowing a temporary deviation from this objective for Member States that have already reached it, under the condition that an appropriate safety margin with respect to the deficit reference value is preserved and that the budgetary position is expected to return to the medium-term budgetary objective within the programme period, the Council shall take into account the implementation of major structural reforms which have direct long-term cost-saving effects, including by raising potential growth, and therefore a verifiable impact on the long-term sustainability of public finances.

When defining the adjustment path to the medium-term budgetary objective for Member States that have not yet reached this objective and in allowing a temporary deviation from this objective for Member States that have already reached it, under the condition that an appropriate safety margin with respect to the deficit reference value is preserved and that the budgetary position is expected to return to the medium-term budgetary objective within the programme period, the Council shall take into account the implementation of structural reforms which are targeted at ensuring a more effective use of public funds resulting in the reduction of unnecessary expenses and which are conducive to the achievement of the Union’s growth and jobs objectives, and social and regional cohesion.

Amendment  31

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 7

 

Text proposed by the Commission

Amendment

Special attention shall be paid to pension reforms introducing a multi-pillar system that includes a mandatory, fully funded pillar. Member States implementing such reforms shall be allowed to deviate from the adjustment path to their medium-term budgetary objective or from the objective itself, with the deviation reflecting the net cost of the reform to the publicly managed pillar, under the condition that the deviation remains temporary and that an appropriate safety margin with respect to the deficit reference value is preserved.

Within these reforms, special attention shall be paid to the sustainability of pension systems. Member States implementing such reforms shall be allowed to deviate from the adjustment path to their medium-term budgetary objective or from the objective itself, under the condition that the deviation remains temporary and that an appropriate safety margin with respect to the deficit reference value is preserved.

Amendment  32

Proposal for a regulation – amending act

Article 1 –- point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 8

 

Text proposed by the Commission

Amendment

The Council shall furthermore examine whether the contents of the stability programme facilitate the achievement of sustained convergence within the euro area, closer coordination of economic policies and whether the economic policies of the Member State concerned are consistent with the broad guidelines of economic policies of the Member States and of the Union.

The Council shall furthermore examine whether the contents of the stability programme facilitate the achievement of sustained convergence within the euro area, closer coordination of economic policies and whether the economic policies of the Member State concerned are consistent with Article 9 TFEU, in particular with regard to the promotion of a high level of employment, the guarantee of adequate social protection and the fight against social exclusion, the Union’s growth and jobs objectives, the broad guidelines of economic policies of the Member States and of the Union and the guidelines for the employment policies of the Member States.

Amendment  33

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 1 – subparagraph 9

 

Text proposed by the Commission

Amendment

In periods of severe economic downturn of a general nature Member States may be allowed to temporarily depart from the adjustment path implied by prudent fiscal-policy making referred to in the fourth subparagraph.

Only in periods of a severe economic downturn or a severe rise in unemployment, including its aftermath and the period in which the economy is still operating below potential Member States shall be allowed to temporarily depart from the adjustment path implied by efficient and sustainable fiscal-policy making referred to in the fourth subparagraph in order to facilitate economic recovery.

Amendment  34

Proposal for a regulation – amending act

Article 1 – point 4

Regulation (EC) No 1466/97

Article 5 – paragraph 2

 

Text proposed by the Commission

Amendment

2. The Council shall carry out the examination of the stability programme within at most three months of the submission of the programme. The Council, on a recommendation from the Commission and after consulting the Economic and Financial Committee, shall, if necessary, deliver an opinion on the programme. Where the Council, in accordance with Article 121 of the Treaty, considers that the objectives and the content of the programme should be strengthened with particular reference to prudent fiscal policy-making, the Council shall, in its opinion, invite the Member State concerned to adjust its programme.'

2. The Council shall carry out the examination of the stability programme within at most three months of the submission of the programme. The Council, on a recommendation from the Commission and after consulting the Economic and Financial Committee, the Employment Committee and the Social Protection Committee, shall, if necessary, deliver an opinion on the programme. Where the Council, in accordance with Articles 9 and 121 TFEU, considers that the objectives and the content of the programme should be strengthened with particular reference to efficient and sustainable fiscal policy-making, the Council shall, in its opinion, invite the Member State concerned to adjust its programme.

Amendment  35

Proposal for a regulation – amending act

Article 1 – point 5

Regulation (EC) No 1466/97

Article 6 – paragraph 1

 

Text proposed by the Commission

Amendment

1. As part of multilateral surveillance in accordance with Article 121(3) of the Treaty, the Council shall monitor the implementation of stability programmes, on the basis of information provided by participating Member States and of assessments by the Commission and the Economic and Financial Committee, in particular with a view to identifying actual or expected significant divergences of the budgetary position from the medium-term budgetary objective, or from the appropriate adjustment path towards it ensuing from deviations from prudent fiscal-policy making.

1. As part of multilateral surveillance in accordance with Article 121(3) TFEU, the Council shall monitor the implementation of stability programmes, on the basis of information provided by participating Member States and of assessments by the Commission and the Economic and Financial Committee, the Employment Committee and the Social Protection Committee, in particular with a view to identifying actual or expected significant divergences of the budgetary position from the medium-term budgetary objective, or from the appropriate adjustment path towards it ensuing from deviations from efficient and sustainable fiscal-policy making.

Amendment  36

Proposal for a regulation – amending act

Article 1 – point 5

Regulation (EC) No 1466/97

Article 6 – paragraph 2 – subparagraph 1

 

Text proposed by the Commission

Amendment

2. In the event of a significant deviation from prudent fiscal-policy making referred in the fourth subparagraph of Article 5(1) of this regulation, and in order to prevent the occurrence of an excessive deficit, the Commission, in accordance with Article 121(4) of the Treaty may address a warning to the Member State concerned.

2. In the event of a significant deviation from efficient and sustainable fiscal-policy making referred in the fourth subparagraph of Article 5(1) of this regulation, and in order to prevent the occurrence of an excessive deficit, the Commission, in accordance with Article 121(4) of the Treaty may address a warning to the Member State concerned.

Amendment  37

Proposal for a regulation – amending act

Article 1 – point 5

Regulation (EC) No 1466/97

Article 6 – paragraph 2 – subparagraph 2

 

Text proposed by the Commission

Amendment

A deviation from prudent fiscal policy making shall be considered significant if the following conditions occur: an excess over the expenditure growth consistent with prudent fiscal policy-making, not offset by discretionary revenue-increasing measures; or discretionary revenue-decreasing measures not offset by reductions in expenditure; and the deviation has a total impact on the government balance of at least 0.5 % of GDP in one single year or of at least 0.25 % of GDP on average per year in two consecutive years.

A deviation from efficient and sustainable fiscal policy making shall be considered significant if the following conditions occur: an excess over the expenditure growth consistent with efficient and sustainable fiscal policy-making, not offset by discretionary revenue-increasing measures; or discretionary revenue-decreasing measures not offset by reductions in expenditure; and the deviation has a total impact on the government balance of at least 0,5 % of GDP in one single year or of at least 0,25 % of GDP on average per year in two consecutive years .

Amendment  38

Proposal for a regulation – amending act

Article 1 – point 5

Regulation (EC) No 1466/97

Article 6 – paragraph 2 – subparagraph 3

 

Text proposed by the Commission

Amendment

The deviation shall not be considered if the Member State concerned has significantly overachieved the medium-term budgetary objective, taking into account the presence of excessive macroeconomic imbalances, and the budgetary plans laid out in the stability programme do not jeopardise this objective over the programme period.

The deviation shall not be considered if the Member State concerned has achieved the medium-term budgetary objective, taking into account the presence of excessive macroeconomic and social imbalances, and the budgetary plans laid out in the stability programme do not jeopardise this objective over the programme period.

Amendment  39

Proposal for a regulation – amending act

Article 1 – point 5

Regulation (EC) No 1466/97

Article 6 – paragraph 2 – subparagraph 4

 

Text proposed by the Commission

Amendment

The deviation may be equally not considered in case of severe economic downturn of a general nature.

The deviation may be equally not considered in case of a severe economic downturn or a severe rise in unemployment.

Amendment  40

Proposal for a regulation – amending act

Article 1 – point 5

Regulation (EC) No 1466/97

Article 6 – paragraph 3

 

Text proposed by the Commission

Amendment

3. In the event that the significant deviation from prudent fiscal-policy making persists or is particularly serious, the Council, on a recommendation from the Commission, shall address a recommendation to the Member State concerned to take the necessary adjustment measures. The Council, on a proposal from the Commission, shall make the recommendation public.

3. In the event that the significant deviation from efficient and sustainable fiscal-policy making persists or is particularly serious, the Council, on a recommendation from the Commission, shall address a recommendation to the Member State concerned to take the necessary adjustment measures. The Council, on a proposal from the Commission, shall make the recommendation public.

Amendment  41

Proposal for a regulation – amending act

Article 1 – point 6 – point a

Regulation (EC) No 1466/97

Article 7 – paragraph 1

 

Text proposed by the Commission

Amendment

1. Each Member State with a derogation shall submit to the Council and the Commission information necessary for the purpose of multilateral surveillance of regular intervals under Article 121 of the Treaty in the form of a convergence programme, which provides an essential basis for price stability and for strong sustainable growth conducive to employment creation.

1. Each Member State with a derogation shall submit to the Council and the Commission information necessary for the purpose of multilateral surveillance of regular intervals under Article 121 of the Treaty in the form of a convergence programme, which provides an essential basis for price stability, competitiveness and convergence and for strong sustainable growth conducive to employment creation.

Amendment  42

Proposal for a regulation – amending act

Article 1 – point 6 – point b – point i a (new)

Regulation (EC) No 1466/97

Article 7 – paragraph 2 – point a a (new)

 

Text proposed by the Commission

Amendment

 

(ia) the following point is inserted:

 

"(aa) information on the consistency of the medium-term budgetary objective with the Union’s growth and jobs objectives, the broad guidelines for the economic policies of the Member States and of the Union and the guidelines for the employment policies of the Member States;"

Amendment  43

Proposal for a regulation – amending act

Article 1 – point 6 – point b – point ii

Regulation (EC) No 1466/97

Article 7 – paragraph 2 – point c

 

Text proposed by the Commission

Amendment

(c) a quantitative assessment of the budgetary and other economic policy measures being taken or proposed to achieve the objectives of the programme, comprising a cost-benefit analysis of major structural reforms, which have direct long-term cost-saving effects, including by raising potential growth;

(c) a quantitative assessment of the budgetary and other economic policy measures being taken or proposed to achieve the objectives of the programme, comprising a cost-benefit analysis of major structural reforms, which are conducive to the achievement of the Union’s growth and jobs objectives;

Amendment  44

Proposal for a regulation – amending act

Article 1 – paragraph 6 – point c

Regulation (EC) No 1466/97

Article 7 – paragraph 3

 

Text proposed by the Commission

Amendment

'3. The information about the paths for the general government balance and debt ratio, the growth of government expenditure, the planned growth path of government revenue at unchanged policy, the planned discretionary revenue measures and the main economic assumptions referred to in paragraph 2(a) and (b) shall be on an annual basis and shall cover the preceding year, the current year and at least the following three years.'

3. The information about the paths for the general government balance and debt ratio, the growth of government expenditure and its contribution to the implementation of the Union’s growth and jobs objectives, the planned growth path of government revenue at unchanged policy, the planned discretionary revenue measures, the paths for growth and indicators of the competitiveness and convergence of the economy and the main economic assumptions referred to in point (a), (aa) and (b) of paragraph 2 shall be on an annual basis and shall cover, the preceding year, the current year and at least the following three years.

Amendment  45

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 1

 

Text proposed by the Commission

Amendment

1. Based on assessments by the Commission and the Economic and Financial Committee, the Council shall, within the framework of multilateral surveillance under Article 121 of the Treaty, examine the medium-term budgetary objectives presented by the Member States concerned, assess whether the economic assumptions on which the programme is based are plausible, whether the adjustment path towards the medium-term budgetary objective is appropriate and whether the measures being taken and/or proposed to respect that adjustment path are sufficient to achieve the medium-term budgetary objective over the cycle and to achieve sustained convergence.

1. Based on assessments by the Commission, the Economic and Financial Committee, the Employment Committee and the Social Protection Committee, the Council shall, within the framework of multilateral surveillance under Article 121 TFEU and of the examination of the implementation of the employment policies in accordance with Article 148 TFEU, examine the medium-term budgetary objectives and the expected path of the general debt ratio as presented by the Member States concerned in their convergence programmes, assess whether the economic assumptions on which the programme is based are plausible, whether the adjustment path towards the medium-term budgetary objective is appropriate and whether the measures being taken and/or proposed to respect that adjustment path are sufficient to achieve the medium-term budgetary objective over the cycle and to achieve sustained convergence.

Amendment  46

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 1 a (new)

 

Text proposed by the Commission

Amendment

 

In the case of sudden external shocks of any nature identified by the Commission, the medium-term budgetary objective may be amended by the Council upon the request of the Member State concerned or following a proposal from the Commission.

Amendment  47

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 3

 

Text proposed by the Commission

Amendment

With a view to ensuring that the medium-term budgetary objective is effectively achieved and maintained, the Council shall verify that the growth path of government expenditure, taken in conjunction with the effect of the measures being taken or proposed on the revenue side, is consistent with prudent fiscal-policy making.

With a view to ensuring that the medium-term budgetary objective is effectively achieved and maintained, the Council shall verify that the growth path of government expenditure, taken in conjunction with the effect of the measures being taken or proposed on the revenue side, is consistent with efficient and sustainable fiscal-policy making and the Union’s growth and jobs objectives.

Amendment  48

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 4 – introductory part

 

Text proposed by the Commission

Amendment

Fiscal-policy making shall be considered prudent and thereby conducive to the achievement of the medium-term budgetary objective and its maintenance over time if the following conditions are satisfied:

Fiscal-policy making shall be considered efficient and sustainable and thereby conducive to the achievement of the medium-term budgetary objective and its maintenance over time if the following conditions are satisfied:

Amendment  49

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 4 – point a

 

Text proposed by the Commission

Amendment

(a) for Member States that have achieved the medium-term budgetary objective, annual expenditure growth does not exceed a prudent medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures;

(a) for Member States that have achieved the medium-term budgetary objective, annual expenditure growth does not exceed a efficient and sustainable medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures;

Amendment  50

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 4 – point b

 

Text proposed by the Commission

Amendment

(b) for Member States that have not yet reached their medium-term budgetary objective, annual expenditure growth does not exceed a rate below a prudent medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures. The size of the shortfall of the growth rate of government expenditure compared to a prudent medium-term rate of GDP growth is set in such a way as to ensure an appropriate adjustment towards the medium-term budgetary objective;

(b) for Member States that have not yet reached their medium-term budgetary objective, annual expenditure growth does not exceed the efficient and sustainable medium-term rate of GDP growth, unless the excess is matched by discretionary revenue measures. The size of the difference of the growth rate of government expenditure compared to a efficient and sustainable medium-term rate of GDP growth is set in such a way as to ensure an appropriate adjustment towards the medium-term budgetary objective;

Amendment  51

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 4 – point c

 

Text proposed by the Commission

Amendment

(c) discretionary reductions of government revenue items are matched either by expenditure cuts or by discretionary increases in other government revenue items or both.

(c) discretionary reductions of government revenue items are matched either by expenditure cuts or by discretionary increases in other government revenue items or both for Member States not having achieved their medium-term budgetary objectives.

Amendment  52

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 5

 

Text proposed by the Commission

Amendment

The prudent medium-term of growth should be assessed on the basis of projections over a ten-year horizon updated at regular intervals.

The efficient and sustainable medium-term of growth should be assessed on the basis of projections over a ten-year horizon updated at regular intervals.

Amendment  53

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 7

 

Text proposed by the Commission

Amendment

Special attention shall be paid to pension reforms introducing a multi-pillar system that includes a mandatory, fully funded pillar. Member States implementing such reforms shall be allowed to deviate from the adjustment path to their medium-term budgetary objective or from the objective itself, with the deviation reflecting the net cost of the reform to the publicly managed pillar, under the condition that the deviation remains temporary and that an appropriate safety margin with respect to the deficit reference value is preserved.

Within those reforms, special attention shall be paid to the sustainability of pension systems. Member States implementing such reforms shall be allowed to deviate from the adjustment path to their medium-term budgetary objective or from the objective itself, under the condition that the deviation remains temporary and that an appropriate safety margin with respect to the deficit reference value is preserved.

Amendment  54

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 8

 

Text proposed by the Commission

Amendment

The Council shall furthermore examine whether the contents of the convergence programme facilitate the closer coordination of economic policies and whether the economic policies of the Member State concerned are consistent with the broad guidelines of economic policies of the Member States and of the Union. In addition, for ERM2 Member States, the Council shall examine whether the content of the convergence programme ensure a smooth participation in the exchange rate mechanism.

The Council shall furthermore examine whether the contents of the convergence programme facilitate the closer coordination of economic policies and whether the economic policies of the Member State concerned are consistent with Article 9 TFEU, in particular with regard to the promotion of a high level of employment, the guarantee of adequate social protection and the fight against social exclusion, the Union’s growth and jobs objectives, the broad guidelines of economic policies of the Member States and of the Union and the guidelines for the employment policies of the Member States. In addition, for ERM2 Member States, the Council shall examine whether the content of the convergence programme ensure a smooth participation in the exchange rate mechanism.

Amendment  55

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 1 – subparagraph 9

 

Text proposed by the Commission

Amendment

In periods of severe economic downturn of a general nature Member States may be allowed to temporarily depart from the adjustment path implied by prudent fiscal-policy making referred to in the fourth subparagraph.

Only in periods of a severe economic downturn or a severe rise in unemployment, including its aftermath and the period in which the economy is still operating below potential Member States shall be allowed to temporarily depart from the adjustment path implied by efficient and sustainable fiscal-policy making referred to in the fourth subparagraph.

Amendment  56

Proposal for a regulation – amending act

Article 1 – point 8

Regulation (EC) No 1466/97

Article 9 – paragraph 2

 

Text proposed by the Commission

Amendment

2. The Council shall carry out the examination of the convergence programme within at most three months of the submission of the programme. The Council, on a recommendation from the Commission and after consulting the Economic and Financial Committee, shall, if necessary, deliver an opinion on the programme. Where the Council, in accordance with Article 121 of the Treaty, considers that the objectives and the content of the programme should be strengthened with particular reference to prudent fiscal-policy making, the Council shall, in its opinion, invite the Member State concerned to adjust its programme.'

2. The Council shall carry out the examination of the convergence programme within at most three months of the submission of the programme. The Council, on a recommendation from the Commission and after consulting the Economic and Financial Committee, the Employment Committee and the Social Protection Committee, shall, if necessary, deliver an opinion on the programme. Where the Council, in accordance with Articles 9 and 121 TFEU, considers that the objectives and the content of the programme should be strengthened with particular reference to efficient and sustainable fiscal-policy making, the Council shall, in its opinion, invite the Member State concerned to adjust its programme.

Amendment  57

Proposal for a regulation – amending act

Article 1 – point 9

Regulation (EC) No 1466/97

Article 10 – paragraph 1 – subparagraph 1

 

Text proposed by the Commission

Amendment

1. As part of multilateral surveillance in accordance with Article 121(3) of the Treaty, the Council shall monitor the implementation of convergence programmes, on the basis of information provided by Member States with a derogation and of assessments by the Commission and the Economic and Financial Committee, in particular with a view to identifying actual or expected significant divergences of the budgetary position from the medium-term budgetary objective, or from the appropriate adjustment path towards it, ensuing from deviations from prudent fiscal-policy making.

1. As part of multilateral surveillance in accordance with Article 121(3) TFEU, the Council shall monitor the implementation of convergence programmes, on the basis of information provided by Member States with a derogation and of assessments by the Commission and the Economic and Financial Committee, the Employment Committee and the Social Protection Committee, in particular with a view to identifying actual or expected significant divergences of the budgetary position from the medium-term budgetary objective, or from the appropriate adjustment path towards it, ensuing from deviations from efficient and sustainable fiscal-policy making.

Amendment  58

Proposal for a regulation – amending act

Article 1 – point 9

Regulation (EC) No 1466/97

Article 10 – paragraph 2 – subparagraph 2

 

Text proposed by the Commission

Amendment

A deviation from prudent fiscal policy making shall be considered significant if the following conditions occur: an excess over the expenditure growth consistent with prudent fiscal policy-making, not offset by discretionary revenue-increasing measures; or discretionary revenue-decreasing measures not offset by reductions in expenditure; and the deviation has a total impact on the government balance of at least 0.5% of GDP in one single year or of at least 0.25% of GDP on average per year in two consecutive years.

A deviation from efficient and sustainable fiscal policy making shall be considered significant if the following conditions occur: an excess over the expenditure growth consistent with efficient and sustainable fiscal policy-making, not offset by discretionary revenue-increasing measures; or discretionary revenue-decreasing measures not offset by reductions in expenditure; and the deviation has a total impact on the government balance of at least 0,5% of GDP in one single year or of at least 0,25% of GDP on average per year in two consecutive years.

Amendment  59

Proposal for a regulation – amending act

Article 1 – point 9

Regulation (EC) No 1466/97

Article 10 – paragraph 2 – subparagraph 3

 

Text proposed by the Commission

Amendment

The deviation shall not be considered if the Member State concerned has significantly overachieved the medium-term budgetary objective, taking into account the presence of excessive macroeconomic imbalances, and the budgetary plans laid out in the stability programme do not jeopardise this objective over the programme period.

The deviation shall not be considered if the Member State concerned has achieved the medium-term budgetary objective, taking into account the presence of excessive macroeconomic or social imbalances, and the budgetary plans laid out in the stability programme do not jeopardise this objective over the programme period.

Amendment  60

Proposal for a regulation – amending act

Article 1 – point 9

Regulation (EC) No 1466/97

Article 10 – paragraph 2 – subparagraph 4

 

Text proposed by the Commission

Amendment

The deviation may be equally not considered in case of severe economic downturn of a general nature.

The deviation may be equally not considered in case of a severe economic downturn or a severe rise in unemployment.

Amendment  61

Proposal for a regulation – amending act

Article 1 – point 9

Regulation (EC) No 1466/97

Article 10 – paragraph 3

 

Text proposed by the Commission

Amendment

3. In the event that the significant deviation from prudent fiscal policy making persists or is particularly serious, the Council, on a recommendation from the Commission, shall address a recommendation to the Member State concerned to take the necessary adjustment measures. The Council, on a proposal from the Commission, shall make the recommendation public.'

3. In the event that the significant deviation from efficient and sustainable fiscal policy making persists or is particularly serious, the Council, on a recommendation from the Commission, shall address a recommendation to the Member State concerned to take the necessary adjustment measures. The Council, on a proposal from the Commission, shall make the recommendation public.'

PROCEDURE

Title

Amendment of Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

References

COM(2010)0526 – C7-0300/2010 – 2010/0280(COD)

Committee responsible

ECON

Opinion by

       Date announced in plenary

EMPL

21.10.2010

 

 

 

Rapporteur

       Date appointed

Pervenche Berès

21.10.2010

 

 

Discussed in committee

1.12.2010

25.1.2011

 

 

Date adopted

16.3.2011

 

 

 

Result of final vote

+:

–:

0:

35

2

6

Members present for the final vote

Regina Bastos, Edit Bauer, Jean-Luc Bennahmias, Mara Bizzotto, Philippe Boulland, David Casa, Alejandro Cercas, Marije Cornelissen, Frédéric Daerden, Karima Delli, Proinsias De Rossa, Frank Engel, Sari Essayah, Richard Falbr, Ilda Figueiredo, Thomas Händel, Nadja Hirsch, Stephen Hughes, Liisa Jaakonsaari, Danuta Jazłowiecka, Martin Kastler, Ádám Kósa, Patrick Le Hyaric, Veronica Lope Fontagné, Olle Ludvigsson, Elizabeth Lynne, Thomas Mann, Elisabeth Morin-Chartier, Csaba Őry, Rovana Plumb, Konstantinos Poupakis, Sylvana Rapti, Elisabeth Schroedter, Jutta Steinruck, Traian Ungureanu

Substitute(s) present for the final vote

Georges Bach, Raffaele Baldassarre, Sven Giegold, Antigoni Papadopoulou, Evelyn Regner

Substitute(s) under Rule 187(2) present for the final vote

Liam Aylward, Fiona Hall, Janusz Wojciechowski


PROCEDURE

Title

Amendment of Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

References

COM(2010)0526 – C7-0300/2010 – 2010/0280(COD)

Date submitted to Parliament

29.9.2010

Committee responsible

       Date announced in plenary

ECON

21.10.2010

Committee(s) asked for opinion(s)

       Date announced in plenary

BUDG

21.10.2010

EMPL

21.10.2010

 

 

Not delivering opinions

       Date of decision

BUDG

20.10.2010

 

 

 

Rapporteur(s)

       Date appointed

Corien Wortmann-Kool

21.9.2010

 

 

Legal basis disputed

       Date of JURI opinion

JURI

12.4.2011

 

 

 

Discussed in committee

26.10.2010

24.1.2011

22.3.2011

 

Date adopted

19.4.2011

 

 

 

Result of final vote

+:

–:

0:

27

18

1

Members present for the final vote

Burkhard Balz, Udo Bullmann, Nikolaos Chountis, George Sabin Cutaş, Rachida Dati, Leonardo Domenici, Derk Jan Eppink, Diogo Feio, Markus Ferber, Elisa Ferreira, Vicky Ford, Ildikó Gáll-Pelcz, José Manuel García-Margallo y Marfil, Jean-Paul Gauzès, Sven Giegold, Sylvie Goulard, Liem Hoang Ngoc, Wolf Klinz, Jürgen Klute, Rodi Kratsa-Tsagaropoulou, Philippe Lamberts, Astrid Lulling, Arlene McCarthy, Íñigo Méndez de Vigo, Sławomir Witold Nitras, Ivari Padar, Alfredo Pallone, Anni Podimata, Antolín Sánchez Presedo, Olle Schmidt, Edward Scicluna, Peter Simon, Theodor Dumitru Stolojan, Ivo Strejček, Kay Swinburne, Marianne Thyssen, Ramon Tremosa i Balcells, Corien Wortmann-Kool

Substitute(s) present for the final vote

Marta Andreasen, Robert Goebbels, Carl Haglund, Krišjānis Kariņš, Barry Madlener, Thomas Mann, Claudio Morganti

Substitute(s) under Rule 187(2) present for the final vote

Karima Delli

Date tabled

29.4.2011

Last updated: 26 May 2011Legal notice