what gets in the way of the European Commission’s plan

2023-04-15 09:00:00

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CHRONIC. The European Union could return to its pre-Covid-19 fiscal prudence. In many ways, there is reason to be skeptical.

By Patrick Artus*

The EU wants to reconnect with the budgetary seriousness that prevailed before the Covid-19 crisis.
© Nicolas Landemard / Le Pictorium / MAXPPP / Le Pictorium/Maxppp

Published on 04/15/2023 at 09:00

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Lhe European Commission wishes to restore, from 2024, budgetary rules very similar to those applied until 2019 in the European Union: limit of 3% of Gross Domestic Product (GDP) for the total public deficit; excessive deficit procedure for countries that do not apply sufficient budgetary discipline. The only flexibility introduced would concern the return to 60% of GDP of the public debt ratio: the timetable for this return would be specific to each country, essentially depending on its current level of public debt.

This position of the European Commission is unrealistic, given the foreseeable rise in interest payments on public debts, the foreseeable rise also in real long-term interest rates, and the rise…