You're reading: EU summit to back idea of separate euro zone budget-draft conclusions

BRUSSELS - The euro zone should have its own budget, which would be separate from the long-term budget of the wider European Union, draft conclusions of an EU summit to take place next week said.

“For the euro area, the objective is to move towards an
integrated budgetary framework,” said the draft conclusions,
obtained by Reuters.

“In that context, mechanisms to prevent unsustainable
budgetary developments, as well as mechanisms for fiscal
solidarity, e.g. via an appropriate fiscal capacity, should be
explored,” the draft said.

“Such mechanisms would be specific to the euro area and
therefore not be covered by the Multiannual Financial
Framework,” the draft said.

The Multiannual Financial Framework is the European Union’s
long-term budget which amounts to around 1 percent of the gross
domestic product of the 27-nation bloc.

It is used to support the EU’s agriculture policy as well as
investment in the EU’s poorer countries and regions, among
others.

The idea of a separate euro zone budget is supported by
Germany, but many non-euro zone countries, which now benefit
from the funds of the EU-wide budget, are concerned that its
creation would diminish the amount of money available to them.

The conclusions also showed that EU leaders would support
the idea of euro zone countries entering into contractual
agreements with EU institutions to implement reforms.

“The smooth functioning of EMU (the euro zone) for stronger
and sustainable economic growth, employment and social cohesion
requires stronger coordination, convergence and enforcement of
economic policy,” the draft conclusions said.

“In this respect, the idea for the euro area Member States
to enter into individual arrangements of a contractual nature at
the European level on the reforms they commit to undertake and
on their implementation should be explored,” they said.