The financial crisis of 2008 has clearly shown that the European Union did not and still does not have the necessary instruments to effectively counteract major crises. Even though the debate on an appropriate budget for the Eurozone has been going on for decades, the competent Committee is now trying to present concrete proposals for its structuring in a report.

Draft report: three pillars

The draft report states that the financial crisis of 2008 exposed gaps in the structure and the resilience of the Eurozone. Due to a lack of appropriate instruments, the Member States were not able to react adequately to the economic shocks. Even though in the course of the crisis relevant reforms (European Semester, ESM etc.) had been initiated, the European Parliament, however, in these cases only plays a subordinate role. Therefore, one now demands a separate budget for the Eurozone with common instruments of monetary policy and fiscal policy, which on the one hand would give more control to the European Parliament and which would be based on existing EU law on the other. The report names three main pillars, a budget for the Eurozone has to fulfil:

1. Financial support in return for convergence and structural reforms

2. Counteracting asymmetric shocks by financial transfers based on economic indicators.

3. Symmetric shocks (which in contrast to asymmetric shocks do not influence individual regions, but the entire European Union) shall be weakened by public and private investments, by reducing administrative hurdles, by increasing competitiveness and by completing the banking union.

Debate in the Committee

The MEPs welcomed the draft report as a good starting position for a broader and deeper debate. However, there are still some ambiguities and disagreements with regard to several issues. Debated were the structure and the instruments of the three pillars, the question of competencies at European and national level, the effective capacity of a common budget and the funding associated with it, moral hazard, the role of the ESM, the effectiveness to be able to avert shocks and whether the current legal principles, which were laid down in the agreements are being undermined. Hence, it remains to be seen what the final report will look like and which compromises the factions will agree on.

Further information:

Committee Documents (available only in English)