EU recommendations on economic policies: not “interference” but a process in which UK plays a full part


June 12, 2014
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Recently, articles in among others the Daily Mail, the Times and the Telegraph screamed about EU “interference” in the UK economy, “dramatic interventions in UK policy” and “Brussels” telling the Prime Minister to “tear up his economic policy” (that was definitely not what “Brussels” had said).

This was all because the European Commission had the temerity to propose some “country specific recommendations” on the UK’s economic policy.

But far from the recommendations constituting unwarranted and unwelcome “interference” in national economies, the UK, along with the rest of the member states, decided they should be made and the decisions on their final form will be taken by EU leaders and Finance Ministers, not by the Commission.

Background

This is all part of a well-established process whereby the Commission’s proposed recommendations are discussed and decided upon by all EU heads of government – this year that will happen at the EU summit on 26-27 June – and by Finance Ministers.

In this way, Member States – and not the Commission – collectively have the final say on the texts of these recommendations on what each country needs to do individually to promote sustainable growth and jobs.

The recommendations are not binding on the UK and the process gives the UK an opportunity to have its say on policies in other EU countries.

That opportunity is a valuable one, because half of the UK’s exports go to the rest of the EU, so it matters very much to British businesses that other member states adopt the right policies to consolidate recovery, restore sustainable economic growth – and boost demand for UK products and services.

Equally, policy in the UK matters to other EU countries: if another near collapse of parts of the banking sector or property market were to happen and plunge the UK back into crisis, that would adversely affect everyone in the EU.

This whole process of adopting recommendations on each others’ policies was decided upon by the member states themselves, including the UK, as part of the so-called “European Semester” process underpinning the EU’s Europe 2020 strategy for growth and jobs, itself also approved by all member states.

Incidentally, the Commission is currently conducting a full public consultation – open until October – on the next phase of Europe 2020

Furthermore, there have been such economic policy recommendations, in one form or another, ever since the entry into force of the Maastricht Treaty in 1993.

This is in line with the principle in Article 121 of the Lisbon Treaty (Article 99 of the previous Treaty) – again of course signed by all member states – that “member states shall regard their economic policies as a matter of common concern and shall coordinate them within the Council.”

The current process is explained in full here:

http://www.consilium.europa.eu/special-reports/european-semester/how-does-the-european-semester-work

The Eurozone countries are subject to binding macro-economic targets, which they agreed themselves to reinforce radically under the revised Stability and Growth Pact and other mechanisms.

They did this in order to help prevent a repeat of the economic crisis by stopping reckless policies – such as running up excessive public or private debt – in some Eurozone member states undermining the economies of all the rest and indeed of non-Eurozone member states such as the UK.

But Eurozone member states are free to achieve those binding targets in whatever way they think best.

Only if they failed to achieve them could the fact of ignoring the recommendations – if they do choose to ignore them – be taken into account in deciding whether sanctions should be applied.

As discussed above, no such sanctions could apply to the UK.

In conclusion, while the UK government and the media of course have the perfect right to dispute the content of the recommendations – and the 26-27 June summit will provide an opportunity to do that at the very highest level – the pretence that this is some kind of unwarranted interference in the UK’s economy has no basis in fact.

EU recommendations on economic policies: not "interference" but a process in which UK plays a full part , 3.5 out of 5 based on 6 ratings

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