2024-01-18 10:55:06
The reforms to the fiscal rules of the European Union, which set debt and deficit limits that countries must meet, took another step on Wednesday toward the final stage of negotiations. The plenary session of the European Parliament adopted the negotiating position on the Stability and Growth Pact and called for more space for investment and social spending in the new version of economic governance. Negotiations will now take place in the Council with the governments of the Member States to reach an agreement.
In the plenary session of the European Parliament, the audit report of the Stability and Growth Pact was adopted by 431 votes in favor, 172 votes against and 4 abstentions. The position of the members of the European Parliament is defined in the report and negotiations with Member States on the final text will begin on Wednesday… He leads the Greens, the far right and the far left in public opinion polls.
The optimal thing, according to diplomatic sources, would be for the reform to be agreed and approved before the european elections. To this end, negotiations must be closed the first week of February to conclude the legislative process on time. If these deadlines are not met, the agreed reform would not go ahead and the old fiscal rules would be re-applied.
In line with what was agreed in December by the Economic Affairs Committee of the European Parliament, the plenary session of the European Parliament supports that countries have more room for maneuver to apply economic governance. This formula includes exceptions by which a country must not comply with that 1% deviation from the spending path. The MEPs open the door for investments linked to EU priorities and social spending to enable countries to deviate from that spending path for a maximum period of five years.
In a debate in the plenary session of the European Parliament on the reform of the Stability and Growth Pact, the Commissioner for Economy, Paolo Gentiloni, called for speeding up the negotiations: “with the European elections approaching, the recent deactivation of the Escape Clause and the reintroduction of old rules, it is important and urgent that we finalize this file and provide clarity and predictability to fiscal policy. Because we all know the limits of the old rules.
The agreement reached by the countries last December confirms the difficulty of the negotiation. The tensions between the community decision-making engine, Berlin and Paris were evident. And it became necessary for them to negotiate in parallel in order to forge a delicate agreement with Twenty-seven. This is why it is not entirely clear that the European Parliament can influence crucial aspects of the economic governance reform.
The text adopted in the plenary session of the European Parliament requires that reference figures be set for the annual reduction of debt and deficit for those countries that exceed the thresholds of 60% and 3% of GDP, respectively.
The text coincides with what was agreed by the EU Economy and Finance Ministers last December regarding debt reduction. In line with what was proposed in December by the Economic Affairs Committee of the European Parliament, the European Parliament foresees a path of annual debt reduction of 1% for those countries with levels above 90% of GDP and 0.5% for those with levels between 60% and 90%.
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