EU wants more control of states' budgets

Thursday 24 November 2011 11.12
Proposals to deal with the European debt crisis
Proposals to deal with the European debt crisis

The European Commission has proposed new powers to review draft budgets by eurozone countries and request revisions.

European Commission President José Manuel Barroso said the measures were necessary to ensure that failings in one country could not endanger the eurozone area as a whole.

The powers being sought by the European Commission are substantial and intrusive, but they emerge from a recognition that the eurozone is in deep crisis.

Under the plans, all eurozone countries would have to publish draft budgets by mid-October and Brussels will have the power to ask for revisions if they are not in line with EU rules.

There would also be new and deeper surveillance of countries either already getting emergency financial aid or facing serious financial instability.

The plan also provides for the introduction of controversial eurobonds in which the eurozone as a collective would raise money on the bond markets rather than the current position of individual countries.

Mr Barroso said it could have tremendous benefits for calming bond markets. Germany resolutely opposes the idea.

This morning, German Chancellor Angela Merkel described the idea of introducing eurobonds at this stage as "extraordinarily inappropriate".

EU leaders are expected to debate introducing the legislative package at a summit in Brussels on 9 December.

Pressure 'worrying'

This afternoon, EU Commission Vice President Olli Rehn told MEPs that the pressure in the markets resulting from the eurozone crisis was very worrying and seemed to be getting worse every day.

Asked about the German bond action, Mr Rehn said that the Commission was not running a daily commentary on market events and short-term developments.

However, he said the adverse market conditions suggested that the eurozone needed to redouble its efforts.