With 25 of the European Union’s 27 states agreeing to join a fiscal treaty to enforce budget discipline, more questions are being asked about what exactly David Cameron’s December veto achieved. In Brussels yesterday, everyone bar Britain and the Czech Republic signed the new treaty, with the prime minister expressing “legal concerns” about the use of EU institutions.
Cameron added that “it’s good that the new treaty is absolutely explicit and clear that it cannot encroach on the competences of the EU”, insisting “they must not take measures that in any way undermine the EU single market”, and maintaining the treaty would impose “no obligations on the UK”.
However, shadow foreign secretary Douglas Alexander last night queried the wisdom of Cameron’s walkout:
“The unanswered question after this summit remains what exactly David Cameron achieved by walking out of the EU negotiations last month?
“With the EU institutions now involved, it seems clear that all his earlier phantom veto achieved was to undermine British influence, and so make it harder for Britain to protect its own interests in Europe and push for an effective solution to the eurozone’s problems.”
The new “fiscal comapct” treaty (pdf) states:
National budgets are required to be in balance or in surplus, a criterion that would be met if the annual structural government deficit does not exceed 0.5% of nominal GDP. This balanced budget rule must be incorporated within one year into the member states’ national legal systems, at constitutional level or equivalent. In the event of deviation from this rule, an automatic correction mechanism would be triggered. It will be defined by each member state on the basis of principles proposed by the European Commission.
The EU Court of Justice will be able to verify national transposition of the balanced budget rule. Its decision is binding, and can be followed up with a penalty of up to 0.1% of GDP, payable to the European Stability Mechanism.
The treaty agreed today also reinforces fiscal rules for the euro area by extending reversed qualified majority voting to the decision on whether to place a country in excessive deficit procedure. Reversed qualified majority voting would also be use for imposing sanctions.
The new treaty also contains provisions on the coordination and convergence of member states’ economic policies and on governance of the euro area. In particular, Euro Summit meetings will take place at least twice a year.
Also at yesterday’s Brussels Summit, leaders signed a joint statement (pdf) on economic growth, “towards growth-friendly consolidation and job-friendly growth”, which pledged to:
• Step up efforts to promote young people’s first work experience and their participation in the labour market, with the objective that within a few months of leaving school, young people receive a good quality offer of employment, continued education, an apprenticeship, or a traineeship;
• Increase substantially the number of apprenticeships and traineeships to ensure they represent real opportunities for young people, in cooperation with social partners and where possible integrated into education programmes;
• Make renewed efforts to get early school-leavers into training; and
• Make full use of the EURES job mobility portal to facilitate the cross-border placement of young people, further opening sheltered sectors by removing unjustified restrictions on professional services and the retail sector.
These efforts will be supported by:
• As a first step working with those Member States which have the highest youth unemployment levels to re-direct available EU funds towards support for young people to get into work or training;
• Enhancing cross-border labour mobility, through the revision of EU rules on the mutual recognition of professional qualifications, including the European professional card and the European Skills Passport, the further strengthening of EURES, and progress on the acquisition and preservation of supplementary pension rights for migrating workers.
The need for Europe-wide cooperation on solving the economic crisis could not be greater; as the BBC’s Europe editor Gavin Hewitt wrote:
The warning signs are everywhere. Europe isn’t working. There are 25 million people out of work. Nearly six million of those are under 25.
Part of the focus of this summit will be youth unemployment, with a plan that within four months of leaving school, young people will receive an offer of employment or continued education or training.
If Europe is to recover, much deeper questions have to be answered. Are Europe’s welfare states sustainable? How will Europe compete with emerging nations? Does Europe and in particular the EU have to rethink its whole attitude towards regulation?
So Europe staggers on. The crisis is less intense than it was. The patient is no longer critical but remains dangerously unstable.
• Public support for Cameron’s EU walkout already unravelling – Will Straw, December 13th 2011
• What exactly did Cameron get from the EU summit? – Shamik Das, December 13th 2011
• Cameron turns Britain from an outlier into an irrelevance – James Denselow, December 12th 2011
• Scotland, Wales and Northern Ireland savage Cameron’s anti-EU strategy – Ed Jacobs, December 12th 2011
• How Cameron traded influence for isolation – Ben Fox, December 12th 2011
• Look Left – Europe 26-1 Cameron: Britain isolated like never before – Shamik Das, December 9th 2011
• Cameron didn’t sign EU deal because it’s not in the interests of the one per cent – Shamik Das, December 9th 2011