EU wants member countries to co-ordinate budgets

Image caption,
European Union countries may be forced to co-ordinate their budgets

The European Commission wants EU countries to co-ordinate plans for national budgets in a move to strengthen financial co-operation.

It would involve submitting budgets to the EU for a "peer review", possibly before they go to national parliaments.

Some reports suggested the proposal would involve just the 16 countries using the euro currency, though this has not been made clear.

The Commission said its aim was to help prevent another EU financial crisis.

But the move, controversial as it would mean encroaching on sovereign territory, was immediately criticised by Sweden's prime minister.

The EC statement said: "The Commission proposes to reinforce decisively the economic governance in the European Union [which has 27 members].

"An early peer review of fiscal policies would help shape a fiscal stance for the EU and the euro area as a whole.

"Union countries should begin co-ordinating preparations for national budgets and economic reforms.

"Member states would benefit from early coordination at European level as they prepare their national budgets and national reform programmes," the statement said.

'Deeper surveillance'

Olli Rehn, Europe's economic and monetary affairs commissioner, appeared to suggest that the measures applied to eurozone countries.

He said: "Coordination of fiscal policy has to be conducted in advance, in order to ensure that national budgets are consistent with the European dimension, that they don't put at risk the stability of the other member states."

And he added: "For [the] euro-area it means deeper and broader surveillance, in particular with regard to macroeconomic imbalances."

No one in Mr Rehn's office was available for clarification.

'Shining exception'

Sweden's prime minister, Fredrik Reinfeldt, opposed any tighter surveillance on his country. "That this should concern all countries is something we find a little strange," he told a press conference.

"This kind of discussion could perhaps be possible for [countries] with a budget policy that goes against the [EU] stability and growth pact," he said.

"But countries like Sweden, we are a shining exception with good public finances and don't even come close to the limits one is not permitted to surpass. It is not fair to treat us the same way."

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