The October Package
on Economic Governance
Steven Engels
26/10/2015
The Roadmap towards complete EMU
The Roadmap towards completing EMU
Stage 1
2017
Stage 2
Economic
Union
Boost convergence,
jobs and growth
Financial
Union
Complete banking and
capital markets union
Fiscal Union
A new advisory Fiscal
Board at EU-level
Ensure macro-economic
stabilisation
Strengthen
accountability
Set up Euro Area
Treasury
Legitimacy
Formalise convergence
process
The October package: 5 key texts
• Communication on steps to completing EMU
• Commission decision establishing a European Fiscal Board
• Recommendation for a Council Recommendation to establish
National Competitiveness Boards
• Communication and Proposal for a Council decision on
progressively establishing unified representation of the EA in the
IMF
3
Stage 1: Deepening by Doing
Economic
Union
Financial Union
Fiscal
Union
Political
Union
I. A revamped European Semester
II. A strengthened Economic Governance
III. A consolidated External Representation of the EMU
IV. A complete Banking and Capital Markets Union
4
Stage 1: Deepening by Doing
Economic
Union
Financial Union
Fiscal
Union
Political
Union
I. A revamped European Semester
II. A strengthened Economic Governance
III. A consolidated External Representation of the EMU
IV. A complete Banking and Capital Markets Union
5
I. The Revamped European Semester
• Builds on last year's streamlining exercise
• Foregrounds the common Euro-area dimension of the coordination
exercises
• Increases the focus on employment and social performance
• Promotes convergence by benchmarking and exchange of best
practices
• Increases involvement of the EP and national parliaments
6
Last year's streamlining exercise
• Increased focus on a limited number of priorities for reform
• More room for in-depth dialogue
More integrated country analysis published 3 months earlier
than before
Proposals for recommendations published 2 weeks earlier
than before
• More outreach at the political level and deeper discussion with
national authorities, parliaments and social partners
7
Better integration of EA and national dimensions
Autumn
Forecast
November
AGS+
Winter
Forecast
Recommendation to EA
Opinion on DBP
Communication on action taken in EDP
February
Country
Profile
15 April
15 October
EA MS:
Draft Budgetary Plans
SP
CSR
NRP
Decisions in SGP
EU2020 strategy
Macro-economic surveillance
Fiscal surveillance
May/June
Spring
Forecast
8
Increased involvement of the EP and the national parliaments
More focus on employment and social performance
• New indicators added to the MIP scoreboard
• Activity rate
• Youth unemployment
• Long-term unemployment
• Social impact assessments for stability support programmes
• At Member States' level:
• Stronger involvement of social partners in elaboration of NRP
• Strengthened dialogue between national social partners and Commission
• Pillar of social rights and common benchmarks
10
Benchmarking and mutual learning
• Enhancing ownership and support upward convergence
• Two criteria:
o Closely related to policy instruments
o Demonstrated contribution to higher level objectives
o Need to complement with country-specific economic analysis
• Cf. on-going benchmarking exercise in the Eurogroup
11
Stage 1: Deepening by Doing
Economic
Union
Financial Union
Fiscal
Union
Political
Union
I. A revamped European Semester
II. A strengthened Economic Governance
III. A consolidated External Representation of the EMU
IV. A complete Banking and Capital Markets Union
12
II. The strengthened Economic Governance
• Increases transparency of fiscal rules
• Clarifies the application of the Macro-economic Imbalances
Procedure by the Commission
• Establishes an Advisory European Fiscal Board
• Recommends setting up National Competitiveness Boards
13
Increased transparency of fiscal rules
• More guidance and information sharing
• Clarify the relation between MTO and debt reduction rule
• Streamline methodology for assessing compliance with SGP
• Explore the possibility
recommendations
of
updating
multi-year
Council
14
The macro-economic imbalances procedure
• More focus on Euro Area dimension of the MIP
• More explicit link between observed imbalances and CSRs
• Stable set of categories with clear justification
• Symmetrical application
15
An independent European Fiscal Board
• Commission Decision
• Advise the Commission on
• The implementation of the Union Fiscal Framework
• The appropriate prospective fiscal stance for the EA
• Ad-hoc matters
• Facilitate common understanding between National Fiscal
Councils
• Administratively attached to Secretariat-General
• Functionally independent
• As of 1/11/2015
16
System of National Competitiveness Boards
• Commission proposal for a Council Recommendation
• Objectives:
• Strengthening national ownership of reform agendas by raising
independent policy expertise at national level;
• Reinforcing policy dialogue between EU level and MS
• Competitiveness = comprehensive notion
• Independent, unbiased & transparent
• Inform but do not interfere with wage bargaining practices (art.
152 TFEU and art. 28 of Charter of Fundamental Rights).
• Commission coordinates
17
Stage 1: Deepening by Doing
Economic
Union
Financial Union
Fiscal
Union
Political
Union
I. A revamped European Semester
II. A strengthened Economic Governance
III. A consolidated External Representation of the EMU
IV. A complete Banking and Capital Markets Union
18
Consolidated external representation
• Roadmap Communication and Proposal for a Council Decision
• Article 138 TFEU
• End goal = Unified representation of EA in IMF by 2025 i.e.
• EA President presents the views of the EA in the Board of Governors
• EA President represents EA in IMFC
• Director of EA constituency represents EA in Executive Board
• Transitional arrangements
• Observer Status for EA in the IMF Executive Board
• EA President to address the IMFC
• Work towards EA only constituencies
19
Stage 1: Deepening by Doing
Economic
Union
Financial Union
Fiscal
Union
Political
Union
I. A revamped European Semester
II. A strengthened Economic Governance
III. A consolidated External Representation of the EMU
IV. A complete Banking and Capital Markets Union
20
Completing Banking and Capital Markets Union
• Fully implement agreed legal provisions
• Bank Recovery and Resolution Directive
• Deposit Guarantee Directive
• Bridge financing and backstop for Single Resolution Fund
• Legislative proposal on European Deposit Guarantee Scheme - >
later this year
21
Immediate Next Steps
• Transposition BRRD and SDG Directive - > on-going
• Commission Decision on Fiscal Board -> 1/11/2015
• Other legislative proposals in October Package - > Council and
Eurogroup discussions beginning of November + European Council
in December (EFC – EPC 29/11)
• Launch of the 2016 European Semester - > Mid November
• Proposal on European Deposit Insurance - > later this year
22
Preparing for Stage 2
• Broad consultation on Completing EMU -> 2016
• Expert Group to explore the legal, economic and political
preconditions for the longer-term proposals - > mid 2016
• Commission White Paper - > Spring 2017
23