Economic six pack approved by parliament

A set of legislative measures giving the European Commission the ability to impose sanctions on eurozone countries that fail to control high debts and deficits was approved by MEPs today.

Following nearly a year of haggling between the European Council and the European Parliament – which saw MEPs make thousands of amendments to the original proposals – the so-called six pack passed in a series of tight votes during the Strasbourg plenary session this morning.

The rules, designed to prevent a future debt crisis, hand the commission greater powers to sanction countries that do not keep down their debts and deficits. And in a victory for MEPs over France, a decision by the commission to impose a fine can only be overturned by a majority vote of member states in the council.

In addition, the parliament will have the right to call finance ministers from countries that have been warned to hearings, while the European semester provides for the annual assessment of national budgets. Falsified debt and deficit statistics can lead to a fine of 0.2 per cent of gross domestic product. And countries will be obliged to act pre-emptively to maintain the health of economies threatened by imbalances such as a housing-bubble.

Jerzy Buzek, president of the parliament, said the adoption of the six pack was "good news" for the EU. "We have developed a powerful and resistant armour against any future crisis," he claimed, adding that, "we cannot turn the clock back, but the package will ensure that member states' budgets will be credible."

He continued: "The six pack is about more than sanctions, it is about prevention. It recognises that prevention is better than cure. It is also about more than fiscal discipline, it is about keeping European economies competitive to create jobs and achieve sustainable growth."

The new rules give the EU "hope for future stability" according to Sharon Bowles MEP, who chairs the parliament's economic and monetary affairs committee. "With the eurozone problems now threatening a full blown global crisis similar to that following the collapse of Lehman's, this is a welcome step to show the world that the EU is making solid moves to address flaws in fiscal policy."

But she warned that there was further to go, and that the time for "populist rhetoric" was over. "It is easy to sit on the sidelines and cast gloom and doom over the future of the euro but passing this legislation today is the first signal that European politicians are at last grasping the nettle and taking responsibility for difficult decisions."

The legislation would "discourage member states from evading their responsibilities to each other to ensure the stability of the eurozone," said Guy Verhofstadt, leader of the Alliance of Liberals and Democrats. He cautioned that the six pack was "not a panacea to the current economic crisis" but was a "building block" for future economic governance and growth in the single currency area.

Yet, MEPs were not united. The Socialists and Democrats votes against the proposals because, according to vice-president Stephen Hughes and economics spokesman Udo Bullmann, they see a "better way out of the crisis". In a joint statement they said: "This will make things worse for the European economy and its citizens. Austerity alone will not resolve the eurozone crisis."

And they were joined in opposition by the United European Left/Nordic Green Left group, which denounced the six pack as a "recipe for disaster". Jürgen Klute MEP said: "Countries that are not able to compete with the wealthiest economies in the EU will be forced to follow reform plans drawn up by the commission. In Greece, we can see where this road leads – deeper recession, social unrest and zero revival of the infamous 'market trust'."

Meanwhile the Greens, who voted against three of the six measures, were also cautious, describing the "preoccupation with simultaneous austerity" as "a self-defeating, pro-cyclical cocktail". Economics spokesman Philippe Lamberts said the six pack was a "political choice by the centre-right, which is refusing to abandon, in spite of clear evidence it is exacerbating Europe's problems".

But the no votes of the S&D and GUE/NGL groups were described as "irresponsible" by the centre-right European People's party, the largest group of MEPs. "Financial markets need predictable, strong and transparent European economic governance," said Corien Wortmann-Kool MEP. "The six legislative proposals provide for this. The left's vote of today goes against much-needed rules."

The President of the commission, José Manuel Barroso, who made his annual state of the union address in parliament this morning, said the "mix of discipline and integration holds the key to the future of the euro area."