The government fears that an EU power grab this spring will set legally binding rules allowing Brussels to set "the most primary elements of national budgetary frameworks". An EU directive setting out a "European fiscal framework" and the rules for EU "budgetary surveillance" is expected as early as March ahead of a summit on economic governance in June. The Daily Telegraph understands that the "really big step" will regulate how and when the Treasury forecasts growth and impose "numerical fiscal rules" on all Whitehall departments. The measures, according to British officials, will aim for "tighter budget co-ordination and direction from the centre" in Brussels and could endanger Britain's "fiscal independence". While Britain as a non-euro zone member cannot be fined for breaching spending targets set in Brussels it will be legally bound by "budgetary procedures governing all stages of the budget process" which be set out in the EU directive. "The rules also set out how much expenditure can or cannot increase in a time of slow growth," said the source. "It is fine for the euro zone to do this but Britain needs to keep its autonomy to set its own fiscal plans." The directive will have to be implemented after it is agreed later in the year and it is set to become a political flashpoint for Conservative eurosceptics opposed to EU "economic governance". Bill Cash, the chairman of the House of Commons European scrutiny committee, warned that the directive threatened both the government and parliament's sovereignty. "The direction in which our increased fiscal obligations to the EU are heading gives cause for great concern because they affect our own budgetary arrangements," he said. Mr Cash, whose committee will scrutinise the directive before it is tabled as British legislation, expressed his concern that David Cameron is doing enough to block the expansion of EU powers. "We must, emphatically, fight budget arrangements which come with tax and spending implications," he said. "We talk tough but don't do anything tough. It's no good saying we oppose it. We have to put our foot down and say No." A European Commission official said that the directive was needed for all EU countries to ensure "compliance with debt and deficit thresholds". "Member states must ensure these rules apply to all political institutions and government sub-sectors for it to work," he said. A British diplomat said: "We're in a good place on this, having taken steps such as creating the independent Office for Budget Responsibility, and it's important that we continue to have the flexibility to design fiscal rules according to our own national circumstances."EU 'seeking powers' to vet British budget
The EU is seeking new "budgetary surveillance" powers to vet the British budget before it is presented to parliament, according to government officials.
Wednesday, 19 January 2011
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