GO
Loading...

EU Suggests Tightening Budget Rules

The EU executive suggested stepping up budget rules Wednesday, saying it wanted national parliaments to be more involved in watching public spending as part of a wider effort to keep EU economies' debt and deficits within agreed limits.

Governments would be more likely to stick to budget plans if all national actors - including opposition parties and ministries not directly responsible for finance - were committed to targets the EU has set to cut debt in coming years, it said, calling for better "ownership" of these goals.

"There is considerable scope for strengthening the link between national budgets and the targets presented at the EU level, for instance by more closely involving national parliaments and other sectors of government in the preparation and follow-up of the programs," the European Commission said.

The recent upswing has given many national treasuries a tax windfall that allowed the 13 nations that use the euro to cut their overall deficit to 1.6% of gross domestic product last year - and likely to fall to 1% this year.

Unexpected Bonus

The Commission has asked countries to consider using this unexpected bonus to balance their books but this has not happened: "A part has been spent," it said.

This means the euro and the EU as a whole won't use as much as the agreed 0.5% of GDP to cut debt.

But the EU's executive arm said governments could do more to stop running up debt in the future, calling for better information from finance ministries on what they plan to spend on and how their economies might grow.

Again and again, countries wander off track on the nonbinding medium-term targets they face to cut debt, it said, undermining the credibility of the spending plans it sends to the Commission.

The EU said governments need to listen because reducing deficit and debt would give them more funds to spend on boosting education and innovation, helping their economies to grow in future years and keep pace with tougher competition from the rest of the world.

Balancing the books will become increasingly important as Europe's population ages, increasing the costs of pensions and health care that the state must fund.

Featured

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • Liberty United founder & CEO Peter Thum, discusses how he is trying to reduce gun violence in America by recycling illegal guns into jewelry.

  • CNBC's Julia Boorstin speaks to Thomas Tull, Legendary Entertainment CEO, about the state of the movie industry and his plan for growth at home and in China. Tull said the focus is on making great content across the board.

  • CNBC's Simon Hobbs reports on all the market moving events in Europe today, including talks of sanctions against Russia and a ruling by The Hague against the Russian government to pay more to ex-Yukos shareholders.