Commission defends role as sole guardian of fiscal discipline

Amid growing concerns in Berlin, Frankfurt and The Hague about flexible interpretations of the Stability and Growth Pact, the European Commission ruled out the possibility of transfering the assessment of national budgets to an independent external body.

“This is a political commission that implements ambitious public policy initiatives,” said Pierre Moscovici, the EU commissioner for Economic Affairs, during the presentation of the Commission's Autumn economic forecasts on Thursday (5 November).

But “a political commission is not a politicised Commission", he added in a nod to fiscal hawks who warned about bending the EU's budget deficit rules.

The French Commissioner stressed that the executive’s decisions are based on facts, and defended the work of his services as “fully independent, sound and technical”.

“This is a Commission that applies the rules, no more no less, and it takes its decisions collectively,” he told reporters.

The European Commmission has come under fire recently, as the champions of strict compliance with the SGP believe that Jean-Claude Juncker’s Commission is giving too much leeway to member states to meet their deficit and debt targets.

“There is a big difference between a political Commission and a politicised Commission,” Eurogroup President Jeroen Dijsselbloem said the day before. In his view, the assessment of the national budgets “should be done in a technical way and not in a politicised way”, he said in a veiled criticism.

The decision to grant additional time to France to cut its deficit below the mandatory 3% of GDP, and the ‘pardon’ extended to Italy and Belgium due to its high level of public debt, provoked controversy this year.

>>Read: Pierre Moscovici rejects economic sanctions for member states

Sources close to Dijsselbloem explained that the Dutch finance minister did not have any specific country in mind, and that his comments were a general “warning”. The Commission is expected to publish its assessments on the national draft budgets by the end of November.

Dijsselboem’s warning followed the steps of the European Central Bank (ECB). In a recent paper, the Frankfurt-based institution noted that the use of too much flexibility in the application of the SGP could be “counterproductive”. The ECB was particularly concerned about giving additional time to member states under an excessive deficit procedure to balance their public accounts.

>> Read: ECB attacks Commission's easing of fiscal rules

ECB President Mario Draghi, said early this year that budget rules “can only really be credible if they are applied with very little discretion”. But in the EU, “the fiscal rules have repeatedly been broken and trust between countries has been strained".

Dijsselbloem quoted Draghi to underline that “the SGP is our anchor of confidence” and “we need to adhere to the rules”.

“The Commission’s role is crucial here,” the Dijsselbloem stressed.

In order to guarantee an independent assessment of the national budgets, Dijsselbloem recommended putting in place a European fiscal council “placed outside the Commission”. The executive would give its political opinion based on the independent technical conclusions of this body.

Fiscal board draws criticism

The Commission recently proposed setting up a European fiscal board. But in contrast with Dijsselbloem’s idea, this new body will be hosted by the EU executive, and its functions will focus rather on providing ad-hoc advice, instead of assessing the national budgets.

Asked if the Commission was willing to hand in these powers to the new European fiscal board, Moscovici insisted on maintaining the original plan. This new authority “will be independent but linked to the Commission,” he told reporters.

An EU official told EURACTIV that Dijsselbloem’s comment came from a “misconception” ? a perception that the Commission's directorate-general for Economic and Financial Affairs was not independent from Moscovici’s cabinet.

“This is not the case,” the official stressed, speaking on condition of anonymity.

The official admitted however that the “political leadership” shown by the Commission in dealing with countries like France or Italy in the budgetary procedure could explain this perception.

Meanwhile, the proposal for an independent European fiscal board has elicited criticism in the European Parliament. In a letter sent to Commission President Jean-Claude Juncker, Parliament President Martin Schulz expressed concerns that legislators will not be consulted in nominating the five experts on the new board.

“The democratic accountability of this body, whose assessments will bear political implications, is not ensured,” Schulz said in the letter, seen by EURACTIV.