Sunday, 12 December 2010

Why I've been a bit busy

For many weeks now, I have been working on the so called “Economic Governance” package of European legislation - in simple terms this is the agreement on what countries should do in the future to try to prevent another Greek or Irish crisis - and to bring the weaker economies of Europe back on track. Of course its much more complicated.

A team of 6 MEPs from different countries and different political persuasions have been tasked by their groups to lead on the package. We have had meeting after meeting, picked the brains of experts from across the globe - there are areas where we agree but we’ve also had many debates about differences. Given the economic situation I’m not sure it helps anyone to add the extra confusion by blogging on the twists and turns of those debates.

I’m in a slightly odd position as, unlike the other groups of the European Parliament, my group is almost entirely non Euro-zone. Indeed only 2 of my 54 group colleagues use the “common” currency. The rest of us are split have into those new member states whose countries are committed to join “when ready” and the UK Conservatives who have always stood to keep the pound.

Since September I’ve sometimes felt a bit like an agony aunt. A year and a half ago MEPs from across the Eurozone would have tried to tease me that Sterling should still join the Euro - now members often come instead to seek my views. They understand that non Euro countries can not automatically underwrite euro bailouts and that if Eurozone countries want to hand more power to Brussels this needs to come with opt outs for non Eurozone.

This week I hope that our group of 6 will each put our first thoughts on the table. The rest of the parliament will then get a long period to submit their own amendments there will be public debates and final votes probably in March. Following that there should be a negotiation period with National Governments via the Council of Ministers and final legislation in June.

As of now amongst the group of 6 we will agree that transparency is vital especially decent data and statistics - Governments should not be able mislead with their numbers. Countries will be asked to provide 3 year forecasts and ensure they can get monthly cash reconciliations (the UK already does this - but many don’t).

We will agree that all countries should share and discuss their budgets annually so that they can understand the impacts of their decisions on each others affairs. We will agree that the European parliament should be involved in those discussions.

However there are points where we don’t all agree - I have suggested that the EU budget should be discussed annually at the same time but some have already suggested they will probably not agree with me.

Everyone agrees that there need to be incentives for countries who perform as well as sanctions for those that don’t - but there are long debates about whether one of the incentives should be a common government bond issuance program in the Eurozone (Even though this would only be in the Euro I worry that its expensive with moral hazard). On the sanctions side, my Eurozone colleagues are concerned about the levels and practicality of fines, and when they should be triggered.

There are still points to debate on state vs private pensions schemes and some of my colleagues want to add a European Monetary Fund to this legislation.
On top of this the feisty talk may come in the area of correcting “macro-economic imbalances”. This is economics code for either correcting credit bubbles (think Ireland) which I agree is needed - or for giving the European Commission the right to try to level out almost any economic trend regarding what makes a richer-country-poorer or poorer-country-richer.....

This has a long way to go.