The future of economic governance in the EU - European Union Committee Contents


The House of Lords EU Economic and Financial Affairs and International Trade Sub-Committee, chaired by Lord Harrison, is conducting an inquiry into the future of economic governance in Europe. We invite you to contribute evidence to this inquiry.

The Commission has outlined proposals for reinforcing economic stability, based on greater economic coordination in the European Union, while Herman Van Rompuy, President of the Council, is chairing a task force on economic governance which is considering crisis resolution arrangements, budgetary discipline and divergences in competitiveness between Member States. It is expected that legislative proposals and non-legislated agreements will be brought forward on these issues throughout 2011.

The Committee recognises that the stability and economic health of the Eurozone is vital to the UK's economy. It will therefore explore economic governance as it applies to the Eurozone, as well as to the EU as a whole.

The aim of our inquiry is to inform the debate on the future of economic governance in Europe, and to provide an opinion in advance of any proposals that may be put forward in 2011.

Particular questions raised to which we invite you to respond are as follows (there is no need for individual submissions to deal with all of the issues):

Lessons from the Eurozone crisis

What flaws has the recent fiscal crisis in Europe exposed in the existing system of economic governance? In particular, what lessons have been learned about:

  • surveillance;
  • statistics and their use in monitoring Member States;
  • the interpretation and application of the Stability and Growth Pact;
  • crisis management systems; and
  • macro-economic and competitiveness imbalances amongst Member States?

Economic co-ordination and governance

What should be the objectives of economic coordination in the EU? Specifically, to what extent is greater economic coordination necessary or desirable for economic stability in the EU and the Eurozone?

Should greater coordination be sought across the full EU, or simply within the Eurozone? What might be the implications for the UK of separate economic governance measures within the Eurozone? What are the implications for the UK of the potential development of Eurozone-only institutions, such as the "Eurogroup Council"?

To what degree should economic governance be guided by political discretion as opposed to rules? Could enhanced EU-level political oversight of macroeconomic policy possibly lead to some form of 'economic government'? What is in the UK's national interest in relation to the reform of economic governance? How might a reform of economic governance in Europe affect the role of national parliaments and governments?

The Commission's proposals and Van Rompuy's task force have been concentrating on four areas in particular:

The Stability and Growth Pact

  • What sort of reforms might be necessary to the Stability and Growth Pact?
  • Should the level of public debt be of higher importance when considering how to achieve fiscal discipline?
  • Should the level of private debt be monitored?
  • Should there be a procedure for combating excessive debt and other facets of fiscal sustainability, such as unfunded obligations associated with an ageing population?
  • What sort of sanctions should be available under the Stability and Growth Pact, and when should they be applied? Should the withdrawal of voting rights in Council or withholding EU structural funds be available as sanctions?

Surveillance of macroeconomic imbalances and competitiveness

  • Is there a need for stronger macro-economic surveillance?
  • Should there be changes to multilateral budget surveillance?
  • What role should the broad economic policy guidelines play in the surveillance of macroeconomic imbalances and competitiveness?
  • Should the power to issue policy warnings and recommendations to Member States whose policies are not consistent with the broad economic policy guidelines be used more extensively?

Coordination of fiscal and structural policies

  • Should EU institutions have any say over national budgets? What role should the European Central Bank play?
  • What should be the link between the Stability and Growth Pact and the Europe 2020 strategy? What might be the advantages of a European Semester?
  • What measures might be used to reduce competitiveness imbalances between Member States, and what role might Europe 2020 play?

Crisis resolution mechanism

  • Should there be a permanent crisis resolution mechanism? How should it be funded, and would it require Treaty change or the creation of new institutions such as a European Monetary Fund?
  • What role should the International Monetary Fund or European Central Bank have?
  • How might a permanent crisis resolution mechanism be set up to avoid the issue of moral hazard?
  • Should the UK have participated in the European Financial Stability Facility (the special purpose vehicle funded by Eurozone members with contributions from Poland and Sweden)? What might be the repercussions if the UK does not participate in a permanent crisis resolution mechanism in the future?

We also would welcome your views on any other aspect of the Commission's proposals and the issues being confronted by the Van Rompuy task force. Written submissions need not address all questions

Interested parties are invited to submit a concise statement of written evidence to this inquiry by Friday 24 September 2010.

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