The European Commission is ready to work “relentlessly” to save the opposition that countries like Germany have shown to their project to reform fiscal rules, which they presented two weeks ago, and try to “build a consensus” about it. The plan projects that the countries agree to four-year fiscal paths with Brussels, based on a trajectory of public spending, that guarantee a reduction in debt when it exceeds 60% of GDP, as well as that those States with more than 3% deficit have to reduce it by 0.5% annually.
The proposal has been criticized by Germany, which called for introducing fixed debt reduction targets (1% per year) to ensure its decline, but also by other countries such as France for having precisely incorporated a goal of cutting the uniform deficit despite the fact that the idea was to have adjustment paths differentiated by country. The Brussels approach also includes the option of imposing sanctions on those countries that deviate from the path of fiscal adjustment agreed with the community authorities. The fines would be less than those stipulated in the current framework but also more automatic, to facilitate their application.
“We now hope to start talks with the European Parliament and the Member States and we will work tirelessly to build a consensus and bring the different opinions closer together,” said the vice president of the Community Executive, Maros Sefcovic, before the plenary session of the European Parliament, replacing the commissioner of Economy, Paolo Gentiloni, who could not attend because he was ill.
In Sefcovic’s opinion, approving the new European fiscal framework “is in everyone’s interest” because it will provide certainty to investors and “clarity” to governments, which will once again have to comply with the Stability and Growth Pact – reformed or not – As of January 2024, when the rules limiting debt and deficit to 60% and 3% of GDP, respectively, are reactivated.
“Time is money (…) I hope we can achieve it (agree on the new rules before the end of the year) if we are all up to the challenge,” Vice President Sefcovic told MEPs. The Slovak stressed that the current Stability and Growth Pact has served for 25 years as the “base” for the development of national budgetary policies and has also been “essential” to establish the architecture of the economic and monetary union, although “its deficiencies are have become quite evident” and today’s challenges are far removed from those of the 1990s.
“We are convinced that the proposals will support the stability and growth of the EU in the coming years. They represent a balanced approach that will make the rules more effective,” the vice-president of the Community Executive stressed at the press conference.
