A forthcoming European Commission review of the EU's "six-pack" and "two-pack" rules may offer Italy an opportunity to press for greater flexibility in application of EU budget rules, according to EU sources.

The rules, introduced in the euro zone crisis, oblige the European Commission to review the effectiveness of the fiscal compact legislation by December this year and every five years thereafter. It is understood that officials in the European Commission’s economics and financial affairs division will begin working on the first review this autumn. It will be published by December and presented to the parliament and European Council.

The legislation – setting out the “six-pack” rules, which apply to all 28 EU member states, and the “two-pack” rules, which are limited to euro zone economies – states the report must evaluate the “effectiveness” of the EU’s economic governance rules and how they contribute to EU growth and jobs strategy.

Opportunity for debate

The possibility the report may offer an opportunity to reopen the debate over the EU’s fiscal rules was played down by European Commission sources yesterday.

However, Minister for Finance Michael Noonan said the EU's fiscal rules should be "re-examined" in light of the changing euro zone climate, putting him at odds with German finance minister Wolfgang Schäuble, who reiterated flexibility was built in to the stability and growth pact. On his way into the eurogroup meeting of finance ministers, Mr Noonan said: "I think that the set of fiscal rules which, in effect amount to a fiscal union, were designed . . . in times of great crisis. Now that the euro zone has settled down, I think the rules should be revisited and a more precise interpretation of some of them be laid out. If that means some flexibility in the interest of growth and jobs in Europe, then that would be welcome."

While cautioning against any hope of “dramatic” changes, he said there had already been a move towards flexibility, even from the European Commission. “If there’s a move towards flexibility . . . I think that could contribute to the common purpose across Europe, that European economies would grow more rapidly, that more jobs, particularly for your young people, would be created.”

‘Helpful’

He said Ireland would continue to do “whatever is necessary” to get its deficit below 3 per cent by next year, but allowing national governments to have slightly more discretion would be “helpful for Ireland”.

Italy is due to present its programme for its six-month presidency of the Council of the European Union this morning. That includes a call to recalibrate economic policy towards greater flexibility.