The European Commission Consults Public on New EU Budget Rules

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The European Commission launches public consultation on European fiscal rules. These were suspended last year due to the corona crisis so that EU countries could pump as much money into their economies with impunity as needed to keep companies and jobs.

 

The committee wants to reintroduce the rules in 2023, but they are also due for renewal.

“After the turbulent pandemic, Europe is now entering calmer waters. And thanks to our coordinated and assertive response, economic growth rates are exceeding expectations,” said Vice-President Valdis Dombrovskis. “But the crisis has also revealed certain challenges: higher deficits and debt, wider disparities and inequalities, and a need for more investment. We need economic governance that addresses those challenges.”

The member states are divided into a new pact. France, Italy, and Spain want less stringent requirements for public debt, which has increased everywhere due to the pandemic. The Netherlands and seven other ‘thrifty’ countries are “open” to a debate but really only want the rules to be more transparent and simplified. Above all that, their enforcement improves, they have written to the committee.

In March 2020, EU finance ministers agreed to the commission’s proposal to temporarily let go of fiscal rules related to the corona crisis. By activating an “escape clause” in the so-called Stability and Growth Pact (SGP), which lays down the rules, a budget deficit of less than 3 percent of gross national income (GNI) and government debt of no more than 60 percent will apply of GNI currently does not.

But even before that, the EU daily board thought that the complicated rules should be adjusted. Just before the Covid-19 outbreak, the committee released a report on the functioning of the pact, but a planned “public debate” about the pact’s future came to nothing due to the pandemic. So now the committee will spend the rest of the year on it.

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