Economic and Monetary Policy
The general provisions of particular relevance to this political area are set forth in Article 3 of the first part of the Constitution.
"The Union shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. (...)"
The monetary policy for those EU Member States who have introduced the euro ("euro states", "euro group" or "euro zone") forms part of the exclusive competences of the EU ("Union").
In the field of economic policy, the EU has a special coordinating competence. The third part of the Constitution contains EU provisions for the coordination of national economic policies by the Member States. These provisions are the basis for the Stability and Growth Pact. Many details of this pact, however, are not provided for in the Constitution but in derived ("secondary") legislation, which will continue to be valid but which can also be altered in accordance with procedures laid down in the Constitution.
The provisions of the Constitution relating to economic and monetary policy apply in principle to all Member States. However, a number of special provisions stipulate which decisions can be taken by the euro states among themselves and which decisions apply to the euro group only.
The content of the individual economic and monetary policy provisions that were already included in the EC Treaty remains unaltered. The provisions have been restructured in part, however, and a number of obsolete provisions relating to preliminary stages of the introduction of the Monetary Union have been deleted.
In fact, the Constitution modifies individual procedural provisions. These modifications have the following general aim:
Strengthening of the capacity to act autonomously within the euro zone:
At the Intergovernmental Conference it was agreed that the euro states should have a greater autonomous power of co-decision when the entire Union decides on the admission of new members to the euro zone: a decision of the entire Council of the Union (by a qualified majority) on the admission of new euro members will be adopted only if the qualified majority of the euro group has adopted a recommendation on a corresponding proposal by the Commission. This recommendation must be adopted within six months.
Furthermore, the euro states may take measures autonomously to promote the coordination of their economic and budgetary policy and its control and monitoring, and set out their own economic policy guidelines for the euro zone. Moreover, in connection with certain measures adopted by the Union for the euro states in the framework of the Stability and Growth Pact (especially in the case of excessive government deficits in individual Member States), only the euro states will take part in the vote. In addition, the prerequisites for enabling - specifically the euro states - to speak with one voice and take joint action in the framework of international financial institutions are improved.
Stability and Growth Pact
As in the past, the precise content of this Pact will have to be decided unanimously in a European law by the Council. The protocol, originally included in the Maastricht Treaty, which establishes the relevant reference values for excessive public deficits and government debt (3 per cent or 60 per cent of the GDP) is incorporated in the Constitution. It can, however, be altered or replaced by a European law. The same applies to secondary legislation defining the Pact’s contents.
Regarding the provisions laid down in the Constitution defining the procedure for determining whether a Member State has an excessive deficit and for deciding the recommendations to be given to the states in question, the Intergovernmental Conference reached a compromise:
- From now on, the Council will decide (by a qualified majority) on a proposal - and not on a recommendation as before - by the Commission whether an excessive deficit exists. In this case, the Member State concerned - in contrast to previous provisions - does not have a voting right. "Proposal" instead of "recommendation" from the Commission means that the Council can overrule the Commission only by a unanimous decision, which is much more difficult to achieve.
- The decision on subsequent recommendations to be made to the state with an excessive deficit will still be adopted by the Council (by a qualified majority) on a "recommendation" by the Commission. As before, the state concerned has no voting right at this stage.
- If the procedure outlined above is applied to euro states, Member States that are not part of the euro zone may not vote. The Constitution includes a very well balanced joint declaration on the Stability and Growth Pact. It reiterates the objectives of balanced economic growth and price stability as well as the commitment to budgetary discipline and the objective of achieving a budgetary surplus in "good times". At the same time it is emphasised that the Member States look forward to reform proposals of the Commission and of individual Member States on the further development and the reform of the "Pact".