A ministerial taskforce chaired by Herman Van Rompuy, the president of the European Council, will meet for the second time on 7 June, to identify which radical steps EU governments will accept in order to strengthen economic governance. 

Following the Greek sovereign-debt crisis and concern about the solvency of some eurozone countries, member states have agreed that governance reforms are essential in order to improve the state of their public finances and convince markets that EU governments will not default on outstanding debts.

At a first meeting of the taskforce on Friday (21 May) representatives from member states, the European Commission and the European Central Bank agreed that reforms should include financial sanctions against governments with irresponsible fiscal policies, measures to reduce competitiveness gaps between member states, and a permanent financial support mechanism to help countries that get into difficulties.

Van Rompuy said on Tuesday (25 May) that he had seen “encouraging shifts” in member states’ attitudes to stronger economic governance. But member states are divided over a Commission proposal for detailed EU surveillance of draft national budgets. This is likely to be watered down in future discussions.

German demands

Angela Merkel, Germany’s chancellor, appears to have softened her demand for changes to the EU’s treaty to enforce better discipline in the eurozone. She said last Friday (21 May) that treaty change was an idea that could be discussed “at a later stage”.

Merkel had earlier called for treaty change to strip eurozone members of voting rights if they persistently break the stability and growth pact rules, which limit debts and deficit levels. A new round of treaty change is opposed by David Cameron, the UK’s prime minister, as well as the French government and Commission President José Manuel Barroso.

Barroso said on Tuesday (25 May) that it was essential “to reinforce institutions to which the treaty assigns specific responsibilities on budgetary surveillance” rather than seeking treaty changes.

The UK, Italy and Denmark have this week announced austerity measures in response to the fiscal crisis. Spain, Portugal and Greece announced deficit-reduction packages earlier this month.

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