The European Commission’s Communication ‘Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis’ has now been published in the Official Journal of the European Union 22.1.2009 C 16/1:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:016:0001:0009:EN:PDF
The nine pages of the Communication form a richly documented crash course in EC (EU) state aid law, both previously existing principles and new temporary measures to counter the economic recession.
The Commission applies the Communication from 17 December 2008, the date on which it agreed in principle its content, but not beyond 31 December 2010.
Ralf Grahn
Showing posts with label temporary. Show all posts
Showing posts with label temporary. Show all posts
Thursday, 22 January 2009
Monday, 6 October 2008
EU: Excessive government deficits Id
The Eurogroup, the EU finance ministers (ECOFIN) and the EU heads of state or government (European Council) are going to convene in the wake of the Elysée summit of the European G8 members.
We already saw that there is not going to be one European response, but an effort to coordinate national ones. We also heard about the new flexibility concerning budgetary discipline (and state aid).
Before the summit, Tommaso Padoa-Schioppa had called for a European fund to support banks. In the 3 October 2008 Reuters interview, the former European Central Bank board member and the recent minister of finance of Italy saw the need for public capital at the European or Eurozone level, because the national level leads to conflicts:
http://www.borsaitaliana.reuters.it/news/newsArticle.aspx?type=businessNews&storyID=2008-10-03T092502Z_01_MIE4920AQ_RTROPTT_0_OITBS-CRISI-PADOASCHIOPPA-FONDO.XML
Padoa-Schioppa also mentioned that the rules of the Stability Pact can be suspended in an emergency:
"In una situazione di aperta crisi sarebbe molto più pericoloso per qualunque tipo di stabilità, compresa quella di bilancio, non agire nel modo opportuno per risolvere la crisi che assumere azioni straordinarie".
***
Suspending budget discipline?
Extraordinary times call for extraordinary measures, but how much can the EU system of budgetary discipline be eviscerated legally?
We already saw that the Commission examines compliance with budgetary discipline on the basis of the reference value of 3 % of gross domestic product.
The treaty level escape clause is Article 104(2)(a) of the Treaty establishing the European Community (TEC), where “alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value”.
If the process advances, the Commission addresses an opinion to the Council, but the Council decides “after an overall assessment” if an excessive deficit exists, and the Council makes recommendations to the member state concerned with a view to bringing the situation to an end within a given period. Cf. Article 104(5) ─ (7) TEC.
***
In the next posts, we are going to take a closer look at secondary legislation and rules for interpretation.
Ralf Grahn
We already saw that there is not going to be one European response, but an effort to coordinate national ones. We also heard about the new flexibility concerning budgetary discipline (and state aid).
Before the summit, Tommaso Padoa-Schioppa had called for a European fund to support banks. In the 3 October 2008 Reuters interview, the former European Central Bank board member and the recent minister of finance of Italy saw the need for public capital at the European or Eurozone level, because the national level leads to conflicts:
http://www.borsaitaliana.reuters.it/news/newsArticle.aspx?type=businessNews&storyID=2008-10-03T092502Z_01_MIE4920AQ_RTROPTT_0_OITBS-CRISI-PADOASCHIOPPA-FONDO.XML
Padoa-Schioppa also mentioned that the rules of the Stability Pact can be suspended in an emergency:
"In una situazione di aperta crisi sarebbe molto più pericoloso per qualunque tipo di stabilità, compresa quella di bilancio, non agire nel modo opportuno per risolvere la crisi che assumere azioni straordinarie".
***
Suspending budget discipline?
Extraordinary times call for extraordinary measures, but how much can the EU system of budgetary discipline be eviscerated legally?
We already saw that the Commission examines compliance with budgetary discipline on the basis of the reference value of 3 % of gross domestic product.
The treaty level escape clause is Article 104(2)(a) of the Treaty establishing the European Community (TEC), where “alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value”.
If the process advances, the Commission addresses an opinion to the Council, but the Council decides “after an overall assessment” if an excessive deficit exists, and the Council makes recommendations to the member state concerned with a view to bringing the situation to an end within a given period. Cf. Article 104(5) ─ (7) TEC.
***
In the next posts, we are going to take a closer look at secondary legislation and rules for interpretation.
Ralf Grahn
Sunday, 5 October 2008
EU: Excessive government deficits Ic
The Elysée summit of the European G8 members confirmed what these posts on EMU economic governance have been waiting for: The ‘exceptional and temporary’ government deficits above the reference value indicated by Article 104 TEC are just waiting to happen. The catchword now is ‘flexibility’.
Still, we turn to the current treaty level rules concerning excessive government deficits within the context of economic and monetary union (EMU). The protocol contains the reference values, waiting to be sidelined for the time being.
***
Protocol on excessive deficit procedure
Protocol (No. 20) on the excessive deficit procedure (1992), as published in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/293─294:
THE HIGH CONTRACTING PARTIES,
DESIRING to lay down the details of the excessive deficit procedure referred to in Article 104 of the Treaty establishing the European Community,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing the European Community.
Article 1
The reference values referred to in Article 104(2) of this Treaty are:
— 3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices;
— 60 % for the ratio of government debt to gross domestic product at market prices.
Article 2
In Article 104 of this Treaty and in this Protocol:
— government means general government, that is central government, regional or local government and social security funds, to the exclusion of commercial operations, as defined in the European System of Integrated Economic Accounts;
— deficit means net borrowing as defined in the European System of Integrated Economic Accounts;
— investment means gross fixed capital formation as defined in the European System of Integrated Economic Accounts;
— debt means total gross debt at nominal value outstanding at the end of the year and consolidated between and within the sectors of general government as defined in the first indent.
Article 3
In order to ensure the effectiveness of the excessive deficit procedure, the governments of the Member States shall be responsible under this procedure for the deficits of general government as defined in the first indent of Article 2. The Member States shall ensure that national procedures in the budgetary area enable them to meet their obligations in this area deriving from this Treaty. The Member States shall report their planned and actual deficits and the levels of their debt promptly and regularly to the Commission.
Article 4
The statistical data to be used for the application of this Protocol shall be provided by the Commission.
***
Anchors are the reference values: Government deficit 3 percent of GDP and government debt 60 percent of GDP.
It is important to see that the deficits and debt levels refer to all levels of government, including social security funds.
The upcoming Eurogroup, ECOFIN and European Council meetings can be expected to tally the ‘exceptional and temporary’ deficits above previous levels.
How much beef is there still in the Stability and Growth Pact, already revised?
Ralf Grahn
Still, we turn to the current treaty level rules concerning excessive government deficits within the context of economic and monetary union (EMU). The protocol contains the reference values, waiting to be sidelined for the time being.
***
Protocol on excessive deficit procedure
Protocol (No. 20) on the excessive deficit procedure (1992), as published in the latest consolidated version of the treaties, OJ 29.12.2006 C 321 E/293─294:
THE HIGH CONTRACTING PARTIES,
DESIRING to lay down the details of the excessive deficit procedure referred to in Article 104 of the Treaty establishing the European Community,
HAVE AGREED upon the following provisions, which shall be annexed to the Treaty establishing the European Community.
Article 1
The reference values referred to in Article 104(2) of this Treaty are:
— 3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices;
— 60 % for the ratio of government debt to gross domestic product at market prices.
Article 2
In Article 104 of this Treaty and in this Protocol:
— government means general government, that is central government, regional or local government and social security funds, to the exclusion of commercial operations, as defined in the European System of Integrated Economic Accounts;
— deficit means net borrowing as defined in the European System of Integrated Economic Accounts;
— investment means gross fixed capital formation as defined in the European System of Integrated Economic Accounts;
— debt means total gross debt at nominal value outstanding at the end of the year and consolidated between and within the sectors of general government as defined in the first indent.
Article 3
In order to ensure the effectiveness of the excessive deficit procedure, the governments of the Member States shall be responsible under this procedure for the deficits of general government as defined in the first indent of Article 2. The Member States shall ensure that national procedures in the budgetary area enable them to meet their obligations in this area deriving from this Treaty. The Member States shall report their planned and actual deficits and the levels of their debt promptly and regularly to the Commission.
Article 4
The statistical data to be used for the application of this Protocol shall be provided by the Commission.
***
Anchors are the reference values: Government deficit 3 percent of GDP and government debt 60 percent of GDP.
It is important to see that the deficits and debt levels refer to all levels of government, including social security funds.
The upcoming Eurogroup, ECOFIN and European Council meetings can be expected to tally the ‘exceptional and temporary’ deficits above previous levels.
How much beef is there still in the Stability and Growth Pact, already revised?
Ralf Grahn
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