whether or not new tax rules On time, the Budgets approved by the Member States for 2024 must incorporate adjustments in their expenses. This has been implied by the economic vice-president of the European Commission, Valdis Dombrovskisafter the meeting of the Ministers of Economy and Finance of the European Union (Ecofin) in which the 27 have been given a month to resolve their differences on the tax rule reform before their next meeting on March 14.
The European Comission is aware that the schedule for approving the reform of the Stability and Growth Pact (SGP) “is very tight” and that it is possible that it will not arrive in time so that the Budget for 2024 of each Member State can already be drawn up under the framework of new rules that make it possible to guide public finances flexibly towards the objectives of deficit (3% of GDP) and debt (60% of GDP). “In any case, the European Commission will present the budget guidelines by 2024 and we intend to do so in March”, Dombrovskis remarked. The commissioner has said that he was not yet in a position to announce what these “budgetary guidelines” will be to which the Member States must submit, but he has pointed out that ” in general, they will have to move towards a budget policy more prudentgiven the inflation and the increase in financial costs” due to the rise in interest rates. Dombrovskis also recalled that in 2024 there will no longer be the “escape clause” that was adopted in 2020, after the outbreak of the pandemic, to allow countries to prepare their accounts without the yoke of the sanctioning regime of Stability and Growth Pact (PEC).
“A lot of work to do”
On the table is the proposal of the European Commission launched in November, to give more flexibility to countries like Italy, Greece, Spain or France on the path of reducing public debt but with a regime of sanctions that will be less than the current ones but more automatic.
Both Dombrovskis and the Swedish Finance Minister, Elisabeth Svantesson, have stressed that the Member States have shown this Tuesday “great consensus on a series of key principles and objectives” for the design of the new fiscal rules of the European Union. However, they have added, “we will have to continue working even more” because there are a series of “technical details” that will still have to be agreed upon. “We will have to agree on a series of important issues in order to achieve maximum consensus for next month’s Council meeting”, said the vice-president. “Many have stated that it was necessary to combine the budget adjustment with reforms”, added Svantesson, who wanted to express his “satisfaction” with the progress made in the discussion: “There is still a lot of work to be done to reach a new framework for the EU that we are satisfied with, but today’s debate is moving towards convergence”.
Differences between countries
“The European Commission will continue to support the debates in the coming weeks and this will allow us to present some legislative proposals for the March European Council“, added Dombrovskis to mark the temporary goals of the reform. The Spanish economic vice president, Nadia Calvino, He urged the Community Executive on Monday to present this legislative project “as soon as possible” so that the negotiations advance “as much as possible”.
The debate among the member states is between those who seek greater flexibility to reduce public debt (so as not to strangle growth and continue advancing in the investments necessary for the double green and digital transition) and those who give priority to budgetary stability. “It is not a secret that the Member States have different opinions and starting points, but we do not shy away from complicated discussions,” summed up the Swedish Finance Minister, Elisabeth Svantessonwhose country is leading the negotiations this semester as the rotating presidency of the EU.
“The Commission’s proposal is like entering an unknown continent, nobody knows exactly what it implies,” said the German Finance Minister, upon arrival at the meeting. Christian Lindner. The German minister made his position clear: “We are at the beginning of the exchange of views on the economic governance of the EU. Obviously, the situation has changed. We have to deal with higher debt ratios after the pandemic and this Russian energy war and that is why we have to reorganize the framework of the Stability and Growth Pact. For Germany it is essential that we return to sound and sustainable public finances as soon as possible. We need a reliable and credible path to reduce the deficit and debt ratios in the EU. We recognize the investment needs of the Member States, private and public, for the ecological transition, but that is not an excuse to avoid structural reforms in our economies. So we are open to more flexibility in the medium term, but we need a reliable path of debt and deficit reduction.”
The French Minister of Finance, Bruno the Mayor, expressed his desire to reach a definition of new rules in the coming months: “France supports that all the countries of the Eurozone return to healthy public finances, and the need we have to invest in a decarbonised industry and the fight against climate change. It is the balance that must be found with effective, appropriate rules that achieve a consensus among all the Member States”. Le Maire underlined France’s commitment to budgetary stability: “There is a commitment from the president Emmanuel Macron, which is to bring the deficit below 3% of GDP by 2027 and reduce the level of debt by 2026 and we stick to our promises. We have launched a spending review. We are all convinced that it is necessary to return to sustainable public finances while investing in green investments.”