Proposals point to greater scrutiny of national budgets

SURVEILLANCE:EUROPEAN LEADERS are discussing German proposals to tighten Europe's surveillance of national budgets in the euro zone, an initiative which could see the EU authorities suggest amendments to annual budget plans in the course of a year.

While German chancellor Angela Merkel has been pushing for treaty change in the drive to bolster Europe’s system of economic governance, Berlin has tabled a swathe of other measures which could be advanced within the framework of the treaties as they stand.

The Government, which is reluctant to embark on an effort to change the treaties, is understood to be broadly in favour of proposals for deeper oversight of budgets which do not require any change of the treaties.

At their summit last night, the leaders were to park the question of treaty change by asking European Council president Herman Van Rompuy to examine how to strengthen the EU’s economic union in two reports due at Christmas and during the course of next year.

The German plan to reinforce budgetary surveillance would give a greater role to the European Commission and other euro zone countries in the scrutiny of annual fiscal proposals from the 17 members of the single currency.

Such measures would move far beyond the ambit of the newly introduced European Semester, under which member states must submit draft annual budgets to a review in Brussels.

The plan, discussed at last night’s summit, would oblige governments to provide a more thorough level of detail to Brussels about their taxation and spending plans. The measures would have particular implications for countries using the EU’s excessive deficit procedures, a system designed to bring the public finances of countries which exceed EU budget limits in line with the rules.

Although the commission issues one report under the existing semester system, Germany wants to see an ongoing review of the budget process in each member state and ongoing “peer review” by other governments.

Early drafts of the communiqué from last night’s summit said the draft budgets of euro countries in bailout programmes or the excessive deficit procedure would be examined by the commission and the council of finance ministers.

They would adopt an opinion on the draft and be empowered “to monitor budget execution and, if necessary, to suggest amendments in the course of the year”.

Under a separate but related Dutch proposal, the new system would also hand greater powers to the EU economics and monetary affairs committee to intervene in national economic policy-making.

The discussion comes as part of an effort by EU leaders to improve the governance of the euro zone.