In efforts to achieve a coordinated approach within EMU, EU legislation provides for the following possibilities

Eoin Treacy's view The Broad Economic Policy Guidelines, established and updated annually by the Commission and Council for a period of three years, set out the priorities of economic policy for the European Union. Besides listing general priorities for the EU-27, they also define country-specific reform priorities. Member states transpose these targets into national reform programmes which they have to report on once a year.

The Stability and Growth Pact enables economic policy to be coordinated via two mechanisms. First, the multilateral surveillance framework ensures that Eurozone countries give an account of their reform projects in national stability programmes (the other EU states table convergence programmes). If an EU member runs up an excessive government deficit it is subjected to an excessive deficit procedure that, for EMU members, may result in the imposition of sanctions. Deficit procedures are currently under way against 12 of the 16 EMU states - in Greece's case at an advanced stage.

Furthermore, the Treaty of Lisbon has created the option of tighter, sanctions-linked coordination of the Eurogroup within the framework of the Broad Economic Policy Guidelines. However, this option must still be fleshed out under secondary European law.

In the years ahead the gaps between the EU economies will need to be narrowed. This convergence in competitiveness should naturally be based on the laggards catching up with the leaders. Only then is it likely to be in the interest of all parties involved. The countries in the leading group certainly have an interest in the competitiveness gap closing again. The fear of competition is more than outweighed by the dislike and rejection of permanently higher transfers and aid for the laggards which would loom if no further action were taken. And, for the laggards too, a lack of competitiveness would mean that their growth opportunities would be limited in the long run - and thus their ability to get to grips with the crisis-driven ballooning of government debt.