—

Ensure an annual debate between the European Parliament, the Commission, the Council and representatives from national parliaments on the Stability and Convergence Programmes (SCPs) and the National Reform Programmes (NRPs) and on assessing national economic developments as part of the European Semester,

—

Define the scope of the multilateral surveillance based on TFEU instruments and assessments by the Commission (Article 121, in particular paragraphs 5 and 6, and Article 148) in order to include growth and its economic impact on employment under the same legal framework as that of the existing instruments aiming at preventing excessive macro-economic imbalances, unsustainable fiscal and other policies and addressing financial stability (i.e. avoiding financial bubbles resulting from excessive credit inflows), long-term investment and sustainable growth concerns, with a view to attaining the objectives of the Europe 2020 strategy and of other relevant developments; regular systemic risk assessments by the European Systemic Risk Board should form an integral part of the annual surveillance procedure,

—

Establish an enhanced analytical surveillance framework (including a scoreboard with specific trigger values for early warning) with appropriate methodological tools and transparency for an effective multilateral surveillance based on harmonised economic indicators (real and nominal), which may affect competitiveness positions and/or excessive imbalances; these key indicators may be: effective real exchange rates, current account, productivity (including resource productivity and total-factor productivity), unit labour costs, credit growth and asset price developments (including financial assets and property markets), the growth and investment rate, the unemployment rate, net foreign asset positions, the evolution of the tax basis, poverty and social cohesion and indicators of environmental externalities; alert thresholds should be defined for indicators included in the scoreboard and all developments in these indicators should be complemented by a qualitative assessment by the Commission,

—

Implement in-depth country specific surveillance, if revealed to be necessary by the scoreboard and by the related qualitative assessment referred to above; further to this in-depth country specific surveillance, Member States have responsibility for deciding on national policies which aim to tackle (prevent and correct) macroeconomic imbalances alongside the need to take into account the Commission specific recommendations and Union dimension of those national policies, particularly for those States in the euro area. Adjustment must be directed to both excessive-deficit and excessive-surplus States, taking account of each country’s specific circumstances, such as demographics, the level of private debt, wage trends compared to labour productivity, employment – especially youth employment – and current-account balances,

—

Mandate the Commission to develop adequate analytical tools and expertise to investigate the underlying reasons for the persistent divergent trends within the euro area, including the impact of common policies on the differentiated economic systems within it,

—

Establish common rules for a more effective use of the Broad Economic Policy Guidelines in conjunction with the employment guidelines as a key tool for economic guidance, surveillance and Member State-specific recommendations, having regard to the Europe 2020 strategy, while taking into consideration the convergences and divergences between Members States and their national competitive advantages including the demographic situation, with the aim of strengthening the resilience of the economy to external shocks and the impact that Member States’ decisions may have on other Member States, particularly in the euro area,

—

Establish a mechanism at national level to assess the implementation of the Europe 2020 priorities and the achievement of the relevant national targets included in the National Reform Programme in order to support the yearly evaluation by the EU institutions,

—

Establish procedures in order to allow the Commission to issue early warnings and give policy advice at an early stage directly to Member States; in cases where there is a persistent and aggravated macroeconomic imbalance, a transparent and objective procedure should make it possible for a Member State to be placed in an ‘excessive imbalance position’, triggering stricter surveillance,

—

Establish a ‘European Semester’ for a comparison and assessment of draft budgets of Member States (main elements and assumptions), following discussion by the national parliaments, in order to better evaluate the implementation and future execution of the SCPs and the NRPs. EU and national budgetary rules and procedures should be respected. Member States shall submit their SCPs and NRPs to the Commission in April, after due involvement by national parliaments and taking into account EU-level rules and conclusions; the European Parliament may, for its part, establish a systematic way to support a public debate and increase the awareness, visibility and accountability of these procedures and how the EU institutions have implemented the agreed rules,

—

Establish a ‘European Semester’ for dealing with potential spill-over effects of national fiscal policies as well as the early identification of excessive budgetary deficits and guarantee the coherence between EU- and national-level actions under the Integrated Guidelines, as well as the fulfilment of the quantitative and qualitative targets, such as growth and employment, which would enable a real and timely contribution by all parties concerned, including national parliaments and the European Parliament, as well as the consultation of social partners,

—

Ensure that annual policy recommendations are discussed in the European Parliament before the European Council discussions,

—

Ensure that the main assumptions and indicators used in the underlying forecasts for preparing national SCPs and NRPs are derived in a robust and consistent manner, especially within the euro area; adopt a three-tier approach encompassing a negative, a baseline and a favourable macroeconomic scenario taking into account an uncertain international economic landscape. Methodologies for the calculation of the main budget aggregate should be further harmonised in order to facilitate comparison between Member States,

—

Introduce a stronger commitment in the SCPs and NRPs to adhere to the Medium Term Fiscal Objective (MTFO), which takes into account current levels of debt and implicit liabilities of the Member States, in particular regarding an ageing population,

—

Introduce a stronger link between the SCPs and the NRPs and the national annual and multiannual national budgetary frameworks, while respecting national rules and procedures,

—

Introduce a stronger assessment of the SCPs, from the point of view of their interconnections with other Member States’ targets and those of the Union before adoption of the policies envisaged in the SCPs at national level,

—

Introduce a strong involvement of national parliaments and a consultation of social partners before formal presentation of the SCPs and NRPs at EU level in an agreed time-frame, for instance through an annual debate to take place among national parliaments and the European Parliament on the integrated guidelines and on their respective budgetary orientations,

—

Establish a more systematic ex-post comparison between the planned fiscal, growth and job stances, as given by the Member States in their SCPs and NRPs and the real effective outcome, questioning and following up on substantial divergences between planned and realised figures,

—

Ensure that annual policy recommendations and warnings from the Commission regarding compliance of the Member States with Europe 2020 objectives are followed up and that ‘carrots and sticks’ are developed in order to assure that Member States comply with these objectives,

—

Ensure more accountability and transparency towards Parliament of the EU-level assessment of SCPs and NRPs in order to increase public awareness and peer pressure,

—

Establish, under the aegis of the Commission, an independent, systematic and robust evaluation process in respect of the SCPs and NRPs in order to have a more transparent approach and increase independent assessment,

—

Establish specific procedures and a requirement for Member States, particularly those in the euro area, to inform each other and the Commission before taking economic policy decisions with expected significant spill-over effects, which may jeopardise the smooth functioning of the internal market and of the Economic and Monetary Union (EMU),

—

Establish a requirement for Member States to provide additional information to the Commission, if a substantial concern arises that the policies conducted may jeopardise growth throughout the Union or the proper functioning of the internal market or the EMU or endanger the targets set at the Union level, namely in the Europe 2020 strategy,

—

Take into account the assessment of the European Systemic Risk Board in the multilateral surveillance framework, in particular as regards financial stability, stress tests, potential outward and inward spill-over effects and the accumulation of excessive private debt,

—

Establish a sound and transparent surveillance framework composed of two pillars - economic policies and employment policies - based on Articles 121 and 148 TFEU. Under the employment pillar, as part of the revised and reinforced European Employment Strategy, such a framework should enable the assessment of the appropriateness of employment policies in the light of the Guidelines for the Employment Policies so as to allow the formulation of genuine guidance, taking into account the European dimension and spill-over effects, and their subsequent translation into domestic policymaking. In addition, timely recommendations of a preventive nature should be established in order to address the main weaknesses and challenges faced by Member States’ employment policies and labour markets,

—

Strengthen the role of the Employment Committee, as provided for in Article 150 TFEU – in particular in addressing cross-border employment issues – and the role of the Social Protection Committee as provided for in Article 160 thereof,

—

Ensure, in all budgetary assessments, that structural reforms undertaken by Member States, are explicitly taken into account, in particular pension, health care and social protection reforms aimed at addressing demographic developments, as well as those concerning assistance, education and research, equal weight being given to sustainability and adequacy. An assessment should also be made of the employment and social impact of those reforms, especially on vulnerable social groups, so that no rules are laid down without a prior assessment of their impact on employment and social protection in Member States,

—

Activate the horizontal social clause of the Treaty of Lisbon, taking into account social rights and social objectives when defining new EU policies,

—

Make provision for the European Parliament to be appropriately involved in the surveillance cycle of economic and employment policies and the assessment of the social impact of those policies. In this context, the timing and process of adoption of Integrated Guidelines, in particular the Guidelines for the Employment Policies should be framed in such a way as to allow the European Parliament the necessary time to fulfil its consultative role under Article 148(2) TFEU,

—

Introduce a sound and transparent monitoring and evaluation framework for the Guidelines for the Employment Policies based on EU headline targets, to be followed up with appropriate sub-targets, indicators and scoreboards, taking account of the specific features arising for each Member State in line with the different starting points for each country,

—

Call on the EPSCO and ECOFIN formations of the Council and their respective working parties to strengthen their cooperation, including by holding joint bi-annual meetings to ensure that their policies are genuinely integrated.

—

Integrate better the ‘debt’ criteria (the ‘sustainability aspect’) in each step of the Excessive Deficit Procedure (EDP) and set up an Excessive Debt Surveillance Procedure (EDSP) on the basis of gross debt levels. The EDSP would require detailed regular reports on the debt and deficit dynamics, their interconnection and development, while taking into account country-specific conditions and allowing different timetables for each Member State to recover to the target values set out in the SGP; the Commission should consult the European and relevant national social partners, as part of the EDSP,

—

Take the debt level, debt profile (including maturity) and debt dynamics (an assessment of the sustainability of public finances) more strongly into account in the pace of convergence towards a Member State-specific MTFO to be included in the SCPs,

—

As part of the EDSP, establish a clear, harmonised framework to measure and monitor debt dynamics including implicit and contingent liabilities, such as public pension exposures and public guarantees (whether, inter alia, of principal, interest or income-flows) in public-private partnership investments, and the costs of such investments to the national budget throughout the years,

—

Establish a country-specific differentiated time frame for the process of fiscal consolidation that will occur no later than 2015, with a view to realigning all public deficit levels with the requirements set out in the SGP,

—

Establish a monitoring mechanism including possible public warnings and incremental sanctions and incentives for Member States that have not reached their country specific MTFO or are not approaching it at the agreed pace, as well as possible economic stimulus for countries that have reached their MTFO faster than expected,

—

Establish minimum rules and guidelines for national budgetary procedures (i.e. annual and multiannual financial frameworks) in order to fulfil the obligation in Article 3 of the Protocol (No 12) on the Excessive Deficit Procedure. Those national frameworks should include sufficient information on both the expenditure and revenue sides of the planned budgetary actions in order to enable there to be sensible discussion and scrutiny of the budgetary plans at both national and EU level; in addition, further work on the comparability of national budgets as regards their spending categories and revenues and the political priorities that they reflect is needed,

—

Encourage the establishment of early warning budgetary control mechanisms at national level,

—

Establish pre-specified and pre-emptive measures within the euro area to be decided under the clear competences of the Commission, both for the preventive and the corrective arm of the SGP, in order to facilitate early warning steps and apply them in a progressive way,

—

Enforce and implement such sanctions and incentives for euro-area Member States, taking into consideration the very close interconnections with non-euro-area economies, especially those that are expected to join the euro area, as part of the new multilateral surveillance framework and the enhanced instruments of the SGP and, in particular, a stronger focus of the MTFO,

—

Make the necessary changes to the Commission’s internal decision-making procedure, with due respect to the current principles enshrined in the TFEU, in order to guarantee an efficient and rapid implementation of sanctioning mechanisms under its clear competences, especially for Member States of the euro area,

—

Ensure that the decision on compliance of Member States with the SGP is taken more independently from the Council by the Commission, in order to respect fully the SGP principles.

—

Establish a euro-area-specific framework for reinforced monitoring, focusing on excessive macro-economic divergences, economic growth, unemployment levels, price competitiveness, real exchange rates, credit growth and the current account developments of the Member States concerned,

—

Establish a regular framework to increase coordination among all EU Member States in order to monitor and foster economic convergence and discuss potential macro-economic imbalances within the Union,

—

Increase the importance of the annual euro-area surveillance reports based on quarterly, thematic, multi-country reports, focusing, on the one hand, on potential spill-over effects from global economic developments and from policies and circumstances having a particular impact on certain Member States in the euro area and, on the other hand, on the effects that economic decisions taken by the Euro Group may have on the countries and regions outside the euro area; special attention should be given to identifying policies that generate positive spill-over effects, in particular during economic downturns, and thereby support sustainable growth in the whole euro area,

—

Strengthen the secretariat of the President of the Euro Group,

—

Provide that the Commissioner in charge of Economic and Monetary Affairs will also be a vice-president of the Commission and will be tasked with ensuring that Union’s economic activity is consistent, with overseeing how the Commission exercises its economic, fiscal and financial-market-related responsibilities and with coordinating other aspects of the Union’s economic activity,

—

Increase the transparency and accountability of the decision-making of the Euro Group by establishing a regular dialogue with the President of the Euro Group within the competent Committee in Parliament and by publishing speedily the decisions taken by the Euro Group on their webpage; ensure that at least those non-euro area Members States with an obligation to adopt the common currency have access to the debate within the Euro Group.

—

Establish a permanent mechanism or body (a European Monetary Fund), after due examination of its pros and cons, which should not take more than one year, to be an overseer of sovereign debt developments and to complement the SGP as a mechanism of last resort for cases in which market financing is no longer available for a government and/or Member State exposed to balance of payments problems; it shall be based on existing mechanisms (the European Financial Stability Facility, the European financial stabilisation mechanism and the European balance of payments assistance instrument) and shall include clear rules inter alia on the following aspects:

such a mechanism should not limit the powers of the budgetary authorities to establish the EU budget at an appropriate level, should avoid moral hazard and be consistent with state aid principles and the consequences of ignoring them. It should also be carefully assessed whether non-euro area Member States could possibly join the European financial stabilisation mechanism on a case-by-case basis and after fulfilling pre-defined criteria,

—

Inform the European Parliament of the estimated effect on the EU’s credit rating:

—

Provide sufficient information on the rules for implementing the European financial stabilisation mechanism with regards to the limits of the Multiannual Financial Framework (MFF); given its possible far-reaching budgetary consequences, give further thought to the European financial stabilisation mechanism ahead of the adoption of the MFF regulation,

—

Permit both arms of the budgetary authority to be involved in decisions concerning the impact that this mechanism could have on the EU budget,

—

Support the position that any possible budgetary needs linked to this mechanism should be financed through an ad-hoc revision of the MFF to ensure that sufficient involvement of the budgetary authority is guaranteed on time.

—

Produce a feasibility assessment within one year concerning the establishment, in the long run, of a system under which Member States may participate in the issuance of common European bonds and dealing with the nature, risks and advantages thereof. The assessment should spell out the different legal alternatives and objectives, such as financing long-term European infrastructure and strategic projects by project bonds. The strengths and weaknesses of all options need to be analysed, taking into account possible moral-hazard implications for participating members,

—

Reinforce and update, bearing in mind the Europe 2020 targets, the Union’s cohesion policy, working in close cooperation with the European Investment Bank (EIB), in order to reduce structural weaknesses, even out welfare disparities, strengthen the purchasing power and increase the competitiveness of weaker economic regions, inter alia by facilitating the financing needs of SMEs and their successful participation in the internal market,

—

Reiterate the importance of the independence of the European Central Bank, which is essential for the stability of the financial and free-market economy of the European Union,

—

Urge the maintenance of a clear separation between fiscal and monetary policies in order not to jeopardize the independence of the European Central Bank,

—

Develop common budgetary principles as regards the quality of public spending (both for national and EU budgets) and a set of common policies and instruments to support the Europe 2020 strategy, while balancing budgetary discipline targets and enabling long-term financing of sustainable employment and investment,

—

Establish a clear framework for a renewed joint effort, with EU budgetary funds and EIB financial resources, to further leverage, in the next Multiannual Financial Framework, budgetary funds and benefit from the EIB’s expertise in financial engineering, its commitment to EU policies and its pivotal role among public and private sector financial institutions and to enhance the role of EIB and cohesion funds, in particular during economic downturns,

—

Establish a high-level tax policy group, chaired by the Commission, with a mandate to produce, within one year, a roadmap for a strategic and pragmatic approach to tax policy issues, paying particular attention to combating tax fraud and tax havens, reinvigorating the code of conduct on business taxation while introducing more extensive procedures against unfair tax competition, enlarge automatic exchange of information, facilitating the adoption of growth-enhancing tax reforms and exploring new instruments. The EU external agenda, in particular in the context of the G20, in tax matters should be analysed by this high-level tax policy group,

—

Establish a high-level policy group chaired by the Commission with a mandate to study potential institutional changes within the ongoing economic governance reforms, including the possibility of creating of a European Common Treasury (ECT), with the objective of endowing the European Union with its own financing resources in accordance with the Treaty of Lisbon in order to reduce its dependence on the national transfers.

—

Reinforce the internal market by promoting e-commerce and transnational trade, simplify online payment procedures and harmonise fiscal instruments as a way of reinforcing consumers’ confidence in the European economy.

—

Ensure that any legislative initiatives regarding financial services are in line with the macro-economic policies in order to guarantee the necessary transparency and market stability, and consequently to boost confidence in the markets and economic development,

—

Promote ways of achieving consistent implementation of Pillar II capital requirements in response to specific asset price bubbles or money supply issues,

—

Regulate the interlinkage between financial markets and macro economic policies so as to ensure stability, transparency and accountability and to curb incentives for excessive risk taking,

—

Provide for the assessment on a regular basis of asset price developments and credit growth in Member States and their impact on financial stability and current account developments as well as the real effective exchange rates of Member States,

—

Confer on the European Supervisory Authorities exclusive supervisory powers over large cross-border financial institutions.

—

Ensure a strict implementation of agreed political commitments in the statistical domain,

—

Enhance the investigative powers by the Commission (Eurostat), including on-site inspections without prior warning and access to all accounting and budgetary information, including meetings with individuals or agencies familiar with such information, such as independent economists, business organisations and trade unions, for assessing the quality of public finances. If appropriate, these measures should be accompanied by an increase in its budget and human resources,

—

Require Member States to provide the Commission (Eurostat) with data that comply with the statistical principles set out in Regulation (EC) No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics (1),

—

Require Member States to indicate which data provided to the Commission (Eurostat) are supported by an independent auditor’s report,

—

Establish financial and non-financial sanctions for providing statistics that do not comply with the statistical principles set out in Regulation (EC) No 223/2009,

—

Review the need for more harmonised data, relevant to the economic governance framework proposed in this Annex. In particular, ensure an appropriate quality framework for the European statistics needed in order to enhance the analytical surveillance framework, including a ‘scoreboard’ for an effective multilateral surveillance under Recommendation 1,

—

Harmonise public finance data based on a standardised and internationally accepted methods of accounting,

—

Ensure the consistent and open disclosure of certain off-balance-sheet liabilities, in particular in respect of future payments required for public sector pensions and for long-term contracts with the private sector for the leasing or provision of public facilities.

—

Seek to agree on a euro area/EU representation in the IMF and other relevant financial institutions, where appropriate,

—

Review arrangements for the representation of the euro area/EU in other international bodies in the area of economic, monetary and financial stability,

—

In the spirit of the provisions of the TFEU, include a procedure to fully inform and involve the European Parliament before adopting a decision under Article 138 thereof,

—

Establish a clear and targeted euro area/EU international agenda that will guarantee an international level playing field in the EU fiscal, anti-fraud and financial regulation and supervision agenda,

—

Alongside the measures which can and must be taken as swiftly as possible under the existing institutional framework, initiate a process of reflection, with the aim of identifying the limits of this framework and developing ideas for a reform of the Treaties which will enable the mechanisms and structures which are indispensable for coherent, effective economic governance to be put in place and for real macroeconomic convergence between the Member States both inside and outside the euro area.