Since 2010, the Treaty of Lisbon has served as the legal basis for the European Union. It stipulates the fundamental freedoms. These include the free movement of goods, persons, services and capital. This is the foundation of the single European market. Rules which apply to the whole of Europe make it easier to do business efficiently. Today, much of economic policy is determined by way of European co-ordination.
The single European market has progressed a long way, but economic policy remains first and foremost a national responsibility in many areas. The debt crisis in the eurozone has made it clear that even greater economic policy co-ordination is needed, and that the responsibility of the member states for their own actions must be strengthened. To this end, the Stability and Growth Pact has been supplemented by a new procedure to prevent and correct excessive macroeconomic imbalances. Like the Stability and Growth Pact, it is subdivided into a preventive and a corrective arm, and includes instruments which can insist effectively on necessary structural reforms. The procedure is concentrated on countries which have weaknesses in terms of their competitiveness.
Further to this, the eurozone countries in particular have promised to undertake the measures they deem necessary to strengthen the forces for growth. To this end, the heads of state and government annually make commitments at the highest political level in the context of the Euro Plus Pact, and these are then implemented by the states within the following year.
A new level of priority is attached to existing procedures of economic policy co-ordination which involve all EU countries, and particularly the annual country-specific recommendations. The member states respond to these in their National Reform Programmes (NRPs). Germany's NRP is drawn up by the Federal Government under the leadership of the Economic Affairs Ministry.