63 / 145
COMPLETING AND REBALANCING THE ECONOMIC AND MONETARY UNION
63
be thoroughly discussed with National
Parliaments and social partners before the
Commission proposes Country-Specific
Recommendations (CSRs).
– Within the existing Treaties, the role of the
European Commission should also be
strengthened and inter-institutional political
processes should thereby be streamlined in
the Eurogroup, endowing the competent
European Commissioner with a more central
and formal role in this group, for instance as
a Eurogroup coordinator alongside the
Eurogroup president. This should go along-
side full accountability of both to the
European Parliament. These elements should
all be laid down in the above-mentioned
Inter-Institutional Agreement.
– Last, but not least, the European Stability
Mechanism should be brought back into the
EU normative framework, and further on it
should be integrated into the Treaty. This
also implies a restructuring of its decision-
making procedure in line with EU democrat-
ic principles, such as in the case of the
European Central Bank.
Beyond the parliamentary dimension, de-
mocracy within the EMU should also be more
broadly reinforced through better social dia-
logue on Eurozone issues.
Closer economic policy coordination and a
better macroeconomic policy mix
Changes are needed in the Eurozone’s macroe-
conomic policy mix in order to strengthen recov-
ery in the short term and avoid a deflation. In
particular, internal demand remains low, as evi-
denced by near-zero inflation and high unem-
ployment. Deficient demand is linked to the in-
crease in income inequalities and reduction of
the wage share in total output over the past
two decades as well as to the substantial weak-
ening of national automatic stabilisers since
2010. Demand could be therefore stimulated by
more progressive fiscal policy (with more fa-
vourable treatment of lower-income groups)
and by continued wage increases in high-sur-
plus countries, helping to strengthen consumer
confidence.
Aggregate demand and reduction of social
and gender inequalities should become a fourth
pillar to be added to the “virtuous triangle” of
fiscal responsibility, structural reforms and in-
vestment, put forward in the Commission’s
Annual Growth Survey for 2015. This should
include a gender equality dimension within the
AGS and relevant CSRs.
Furthermore, as emphasised also in the
Parliament’s 2015 report on the review of the
economic governance framework, economic
policy coordination needs to be further deep-
ened in order to ensure that all Eurozone coun-
tries contribute to macroeconomic adjustment
and convergence, including those who have
greater fiscal room for manoeuvre and could af-
ford to run more expansionary fiscal policies
given their extremely low borrowing costs. The
Commission should therefore propose a target
for the Eurozone’s aggregate fiscal stance and
its country-by-country composition in its annual
recommendations to the Euro Area, to be dis-
cussed by the Eurogroup and approved by the
Council and by the European Parliament under
the ordinary legislative procedure.
Closer economic policy coordination goes
beyond fiscal policy and demand management.
The financial crisis is closely related to unsus-
tainable macroeconomic imbalances within the
Eurozone, notably excess savings and specula-
tive investment. Hence, both national current
account deficits and surpluses must be closely