Reinfeldt slams EU plan to vet national budgets

Sweden’s Prime Minister Fredrik Reinfeldt has criticized proposals that would mean all EU countries' budgets being reviewed in advance by the European Commission.

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The proposals, put forward on Tuesday by economic and monetary affairs commissioner Olli Rehn, would apply to all EU countries, including those like Sweden that have not adopted the euro and also including countries that had a record of well-managed public finances.

“We think it’s odd that it would apply to all countries. The presumption should be that those countries whose budgets break the Stability and Growth Pact - you could possibly have a discussion on that point,” Reinfeldt said.

“I will object to this way of looking at things,” he added.

The European Commission plans to create a permanent crisis mechanism to head off future collapses like that seen in Greece, and to further coordinate economic policy.

Among the commission’s suggestions is that member states coordinate at the EU level when preparing economic policy and reform programmes, possibly submitting budgets to the European Commission before putting them to national parliaments. Greater European coordination would help member states cope with common challenges, according to the commission.

"Coordination of fiscal policy has to be conducted in advance, in order to ensure that national budgets are consistent with the European dimension, that they don't put at risk the stability of the other member states,” Rehn said.

The commission has also proposed a permanent mechanism to help member states struggling to order their public finances. The enormous temporary bailout package for Greece, plus a further package agreed to help countries that hit trouble in the future, will need to be supplemented with such a mechanism, the commission says.

The proposals also include changes to strengthen the Stability and Growth Pact, and measures to force countries to follow the rules. More emphasis will be placed on states’ indebtedness and on competitiveness. Countries that repeatedly break the rules of the pact could find themselves losing out on EU money for infrastructure and development projects.