2023-12-08 18:31:41
It’s not yet an agreement at twenty-seven, but we’re getting closer. While, on the night of Thursday December 7 to Friday December 8, Paris and Berlin agreed on the reform of the stability and growth pact, the pressure is strong on the still recalcitrant countries – starting with the frugal ones, like the -Bas, Austria, Finland or Sweden – so that they join this beginning of consensus. “We have made essential progress”welcomed the French Minister of the Economy Bruno Le Maire, after more than eight hours of negotiations with his counterparts, adding that an agreement was within reach ” before the end of the year “.
The Twenty-Seven have been negotiating for months to revise the almost thirty-year-old European budgetary rules, which have been suspended since March 2020 and which are supposed to resume service on January 1, 2024. Given the soaring public debts everywhere in the Old Continent, in the wake of the Covid-19 pandemic and the war in Ukraine, it seems difficult to return to existing rules.
Very complex, accompanied by very heavy and not very credible sanctions (to date, no fine has been imposed), carrying unrealistic objectives, they also have procyclical effects, by adding austerity to the slowdown in the economy. “For twenty years, not only have Europeans had a high level of debt [83 % du produit intérieur brut, PIB, en 2023]but, in addition, their growth is low,” insists Paolo Gentiloni, the Commissioner for the Economy.
Germany obtains “safeguards”
The Commission’s proposal, presented in April, retained the current framework which requires that the public deficit does not exceed 3% of GDP and that the debt remains contained below 60% of national wealth. But it introduced elements of flexibility which should prevent the pursuit of these objectives from hampering growth and depriving governments of the means to make strategic choices for their future.
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On paper, the Franco-German agreement retains this philosophy. A Member State, which does not respect one or other of the Maastricht criteria, can choose, in a controlled manner, the pace of consolidation of its public finances. If it commits to investments likely to boost its growth, in green and digital transitions for example, or to ensure its security, as well as if it launches structural reforms, it will be able to benefit from three additional years of the four planned in order to ensure the sustainability of its debt.
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