The 27 member states of the European Union (EU) They agreed this Wednesday to soften budget rules within the bloc, a decision that seeks to rectify public finances without compromising investments.
EU finance ministers approved “a new economic governance framework that guarantees stability and growth”celebrated the Spanish presidency of the Council of the European Union on the social network
The reform seeks to modernize the Stability and Growth Pact, a kind of “budget corset” created in the late 1990s and which limits the deficit to 3% of GDP and debt 60% in each Member State.
The pact was suspended in 2020 to avoid a drop in economic activity after the covid-19 pandemic. The suspension was maintained due to the Russian invasion of Ukraine, but the pact must be reactivated on January 1.
The new text, which does not eliminate these limits, adapts the rules according to the situation of each country. In this way, it will allow less brutal adjustments for countries in difficulty.
Specifically, in the event of an excessive deficit, the adjustments demanded of a country will be more flexible and realistic.
The agreement was reached after a rapprochement on Tuesday between France and Germany, a defender of limitations to achieve effective debt reduction throughout the EU.
The indebted countries of southern Europe instead insisted on the need to integrate additional flexibilities into the pact, to protect the investment necessary for the green transition and military expenses linked to the war in Ukraine.
The absence of an agreement on these new rules before 2024 would have affected the EU’s credibility in the financial markets. The text still needs to be negotiated with the European Parliament.
Source: Gestion
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