A procedure proposed by the EU Commission in the wake of the Greek crisis in spring 2010, whereby EU member states – initially perhaps only the member states of the European Monetary Union – submit their draft budget to the Commission at the beginning of each year before it is submitted to the national parliaments. The aim is to reduce spending that is clearly contributing to further national debt. In 2010, this debt amounted to an average of almost 85 percent of gross domestic product in the euro member states. According to the Stability and Growth Pact, 60 percent is permissible. This ratio was thus even higher than in the USA, where it was 83 percent at the same time. – The proposal for an exchange of advance information was rejected in principle, especially in Germany, as an encroachment on the budgetary rights of elected representatives. However, it is hardly possible to advocate the euro, denounce other debt-makers in the monetary union and forbid Brussels to interfere in budgetary policy without saying what counterproposals there are to achieve more budgetary discipline for everyone in the common interest. Politically, it would be entirely possible to agree on common budget rules first, for example in the form of a debt brake based on the German model. The Greek crisis has clearly shown that at least the EMU participants need a step-by-step plan according to which ever closer coordination of budgets can be advanced. With the European Semester, however, a big step forward has been made since 2014. – See bail-out, blame game, European Monetary Union, fundamental error, European Stabilization Mechanism, European Treasury, Europayer, liability, budgetary gimmicks, hegemon, lenient, moral hazard, Schumpeter theorem, blocked account, sovereign debt crisis, governance framework, transfer union, two-way option. – Cf. ECB Monthly Bulletin, July 2010, pp. 73 et seq. (joint consolidation strategy indispensable in the long run).
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/