New Fiscal Pact: combating national debt

When 26 EU Member States decided to negotiate and adopt tougher rules to combat national budget deficits in December last year, few observers would have thought they would succeed within two months. Now, 25 Member States have managed to agree to implement a debt brake at national level (also known as "golden rule"), as well as making sanctions against deficit countries almost automatic following an assessment by the European Commission. Only the United Kingdom stood aside in December, followed by the Czech Republic in January. Although this prevented an agreement based on the existing EU Treaties, with the new "fiscal pact" being an intergovernmental agreement, it nonetheless means a significant step forward in gaining the trust of financial markets in the Eurozone and the EU's willingness to overcome financial turbulences and focus on reducing national debt.

EPP Group fighting for conformity with EU law

Although formally an intergovernmental agreement, the European Parliament took part in the negotiations of the fiscal pact. EPP Group member Elmar Brok MEP, one of three Parliament representatives, was able to table amendments for the new text, pushing hard for it to be as close to the EU Treaties as possible.

The EPP Group succeeded in making sure the new agreement does not undermine the EU's community method. In fact, it is to be formally integrated into the EU Treaties within five years, thus avoiding a long-term split of the EU.

The EPP Group has also ensured that the role of the EU institutions has been safeguarded, with the provisions of the agreement to be applied in conformity with EU law. All legal implementations on European level will have to be done by co-decision procedure, ensuring adequate parliamentary participation. The Heads of State and Government of the Eurozone may also ask the President of the European Parliament to join them during their regular summits. The EPP Group also managed to secure a better inclusion of non-Eurozone Member States in the summit meetings.

The new fiscal pact thus provides a step forward for budget discipline in the Eurozone and the EU as a whole, while at the same time reinforcing the progress made under the European Parliament's leadership in strengthening the existing stability and growth pact (which is part of the EU Treaties).