Herman Van Rompuy, the president of the European Council, claimed tonight (7 June) to have secured important commitments from the member states of the European Union to strengthen economic governance. 

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He said that governments had agreed to reform EU rules on fiscal discipline, so that it would be easier to fine member states that pursue irresponsible policies. He hailed as a further advance that governments had agreed to submit certain details from their draft national budgets for analysis at EU level.

Speaking after a meeting with finance ministers of the 27 member states, Van Rompuy said that ministers had agreed that “graduated” financial sanctions should be applied to those countries that pursued irresponsible policies.

Van Rompuy was reporting on the work of a taskforce to strengthen economic governance in the EU. The taskforce contains a representative from each of the EU’s 27 member states, almost without exception its finance minister. The taskforce was set up by the European Council in March as part of it response to the eurozone debt crisis.

Van Rompuy observed that, up to now, the EU’s stability and growth pact, which obliges member states to keep their budget deficits within 3% of their gross domestic product, had contained only “heavy sanctions” that governments were reluctant to apply. He said governments were agreed that the pact needed a “full range of tools” to fulfil its aim. He said that governments had also agreed on the need for early intervention to prevent member states from breaking the 3% threshold. In future, governments could “get into trouble” with their peers even before their deficits reached the 3% ceiling. 

Van Rompuy said that all member states would provide certain details of their draft budgets, including total revenues, spending targets and deficit targets, to the European Commission each spring. But he said that draft budgets would “not be checked in detail or…decided on by European institutions”.

“That is the prerogative of national parliaments,” he said.  

Van Rompuy said that the budget surveillance would take into account the “specificity of some countries”. He clarified that this was a reference to the UK, which has strongly opposed submitting budget details to the Commission or EU finance ministers before they have been seen by its national parliament.

Van Rompuy said that he would report to national government leaders on 17 June about the taskforce’s progress. He hopes to agree a full set of reforms to economic governance by October.