2023-04-26 18:28:25
Since March 2020, Europeans have no longer been subject to any budgetary rules: the Covid-19 pandemic and then the war in Ukraine, which saw the expenditure of the Twenty-Seven soar to help citizens and businesses cope, led them to suspend the stability and growth pact, which has governed their public finances since 1997. Three years after freeing themselves from this text under which the public deficit must not exceed 3% of gross domestic product (GDP) , when the debt must remain contained at less than 60% of the national wealth, they want to prepare the continuation.
On Wednesday 26 April, the Commission put on the table its proposal for reforming the stability pact which, by making it more flexible, largely reconfigures its philosophy. It must be said that his balance sheet cannot be considered satisfactory. Highly complex, accompanied by very heavy and therefore not very credible sanctions, carrying unrealistic objectives, it did not guarantee the Twenty-Seven a sustainable level of debt. It also contributed, after the 2008 financial crisis, to curbing investment and growth on the Old Continent, causing it to lag considerably behind China or the United States.
What is more, there is urgency, since its suspension runs until the end of the year and that in the current state of the public finances of the Twenty-Seven, nobody can imagine returning to the existing rules. Especially since the dual climate and digital transition requires massive investments, without which Europe will be definitively relegated to the second category on the world stage. If they do not want to panic the markets, the Europeans must therefore send them a signal as quickly as possible. They would like to reach an agreement at the end of 2023, for entry into force from 2025. In 2024, the existing rules would be adjusted, anticipating future economic governance.
Divisions
The Commission has been working on its proposal for months. The debates were intense within it and with the capitals, as the subject divides, between the proponents of a strict budgetary orthodoxy and those of a less rigorous approach. For « celebrate” the event, even announced the Commissioner for the Economy, Paolo Gentiloni, on Wednesday, his teams and those of Valdis Dombrovskis, the Vice-President of the Commission, will “have a drink this afternoon”.
Admittedly, the totemic rules of 3% and 60%, enshrined in the treaties, will not disappear. But the Commission wants to move away from a standardized approach, which applies to everyone without distinction, and enter into a more individual logic. To each Member State that does not respect one or other of the Maastricht criteria, it therefore intends to propose a reference budgetary trajectory over four years, adapted to its situation, in order to put it on the path to a reduction “credible of its debt”.
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