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(Jun 11, 2010) On June 8, 2010, the finance ministers of the European Union, in an effort to prevent the economic crises encountered by Greece and other EU Members, endorsed a proposal to review each other's national budgets and to impose sanctions on those states that violate the EU's budgetary rules, known collectively as the Stability and Growth Pact and first adopted in 1999, as amended. The proposal was initially submitted in May 2010 by the Commission but was immediately withdrawn, due to strong opposition from the governments of Germany, Sweden, and the United Kingdom. (Andrew Willis, EU Agrees Controversial Peer Review of National Budgets, EU OBSERVER, June 8, 2010, available at http://euobserver.com/9/30232/?rk=1.)
Under the proposal, EU Members will be required to forward a copy of the national budgets to each other and to the Commission, six months prior to submitting them to their national parliaments. Finance ministers also established that the maximum deficit and debt thresholds must be set at 3 and 60% of GDP, respectively. Fines of up to 0.5% of GDP will be imposed on those Members that exceed their budgets, even though in the past such Members were never sanctioned. (Id.)
Herman Van Rompuy, the President of the European Council, stated that governments have to explain their deficits and those with debt levels of more that 60% of GDP would be subject to stricter review and scrutiny. He also stated that from now on, EU governments could "get into trouble" with their peers even prior to their deficit's reaching the 3% limit. In his words, "up to now, you only got fined for driving through the red light of the three percent ... . From now on, you could also be in trouble for crossing the orange light." (Id.)
|Author:||Theresa Papademetriou More by this author|
|Topic:||Budget More on this topic|
|Jurisdiction:||European Union More about this jurisdiction|
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Last updated: 06/11/2010