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ABC of Community Law 1 – the Six Pack

Legislation to coordinate Member States' economic and budgetary policies ("6 Pack")

A package of EU legislation (the so-called "six pack") entered into force on 13th December 2011 to strengthen the application of rules on the 27 Member States' budget deficits (the Stability and Growth Pact, that requires annual budget deficits to be no more than 3% of the country's Gross Domestic Product and overall budget deficits to be lower than 60% of GDP or approaching that value) and correct imbalances in Member States' economies.
These rules:

  • introduce more transparency and greater surveillance by the Commission of Member States' national budgets (particularly as regards debt reduction)
  • set up a new mechanism to identify imbalances in Member States' economies much earlier, using inter alia a scoreboard of indicators (such as a loss of competitiveness, high unemployment, a high level of private and public indebtedness and asset price bubbles). If necessary, the Commission can issue a recommendation to the Member State concerned to take appropriate action to correct the situation or prevent imbalances from persisting
  • introduce strengthened enforcement of the rules on both public debt and economic imbalances, with the possibility to impose progressive financial sanctions on euro area Member States ranging from an interest-bearing deposit to fines. Sanction decisions are proposed by the Commission and imposed unless a 'qualified' majority of Member States (weighted according to relative population size) votes against.

ABC of Community Law 2 – the Two Pack

Proposals to integrate and coordinate EU countries' economic policies ("2 Pack")

The Commission proposed measures in November 2011 to further strengthen the integration and coordination of EU countries' economic policies (the so-called 'two pack').

In particular, the Commission proposed that:

  • the Commission would have the right to assess euro area Member States' draft budgets before they were adopted and if necessary issue an opinion on them
  • the Commission could request euro area Member States' draft budgets to be revised if they were not compliant with their debt obligations under the Stability and Growth Pact
  • euro area countries with excessive budget deficits would be subject to closer monitoring and reporting requirements throughout the budgetary cycle
  • euro area countries would have to set up independent fiscal councils (to give advice on public spending and deficit issues) and to base their budgets on independent economic forecasts
  • the Commission would be able to decide whether a Member State experiencing severe financial instability should be subject to enhanced surveillance
  • the EU's Council of Ministers would be able to issue recommendations to Member States experiencing severe financial instability to request corrective action.