What would they have done about this “new fiscal compact” agreed at the recent European Council:
- General government budgets shall be balanced or in surplus; this principle shall be deemed respected if, as a rule, the annual structural deficit does not exceed 0.5% of nominal GDP.
- Such a rule will also be introduced in Member States’ national legal systems at constitutional or equivalent level. The rule will contain an automatic correction mechanism that shall be triggered in the event of deviation. It will be defined by each Member State on the basis of principles proposed by the Commission. We recognise the jurisdiction of the Court of Justice to verify the transposition of this rule at national level.
- Member States shall converge towards their specific reference level, according to a calendar proposed by the Commission.
- Member States in Excessive Deficit Procedure shall submit to the Commission and the Council for endorsement, an economic partnership programme detailing the necessary structural reforms to ensure an effectively durable correction of excessive deficits. The implementation of the programme, and the yearly budgetary plans consistent with it, will be monitored by the Commission and the Council.
- A mechanism will be put in place for the ex ante reporting by Member States of their national debt issuance plans.
The requirement that government budgets shall be balanced or in surplus is eminently sensible, but by when would the PM’s critics have achieved it? Given that measure is combined with further surrenders of sovereignty to the Commission, no wonder the EU attracts criticism from both Left and Right.
The PM made a good decision, but far more remains to be done if we are to achieve lasting prosperity and bring European political power under democratic control, perhaps by excluding it from this country.