The New Economic Governance of the European Union: What is it and who does what?

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Policy Brief Series Issue 4, Dec 2011

The New Economic Governance of the European Union: What is it and who does what? Petr Blizkovsky 1

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The crisis in public finance has triggered a change in the economic governance model of the European Union. With regards to public finance, the change concerns the full implementation of the fiscal rules of the Stability and Growth Pact with new sanctions that are stronger than before and partly decoupled from political influence. New legislative rules have been introduced to monitor the macro-economic evolution of the EU and to correct competitiveness slippages in the euro area. New rescue facilities are aimed at creating a firewall to stabilise the euro area as a whole. The new economic governance is developing towards a 'variable geometry' and multiple actors. This means that a smaller number of Member States have committed to coordinating additional measures amongst themselves. Regular meetings of the Euro Summit were introduced. The EU27 remains the owner of the EU project. Euro Aea members decided recently to institute a new 'reinforced economic union' to which another nine countries of the EU might adhere, the United Kingdom being the exception. This will be legally binding by primary law, meaning that it has power over national law.

1 Petr Blizkovsky is the EU Fellow at the Lee Kuan Yew School of Public Policy, National University of Singapore, and Director for Economic and Regional Affairs at the General Secretariat of the Council of the European Union. His email is blizkovsky@yahoo.com. The opinions expressed in the article are those of the author alone.


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