• EU, Dombrovskis: procedure time? They depend on the measures of Italy
  • EU, Dombrovskis: Italy will still have to reduce deficits and debt
  • EU, Dombrovskis: Italy respects deficit targets and debt

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08 October 2019The candidate for vice-president of the Commission responsible for the Economy, Valdis Dombrovskis, spoke of the stability and investment pact during his confirmation hearing in the European Parliament. The former Prime Minister of Latvia from 2009 to 2014 explains that the rules of the Stability and Growth Pact "have become too complex", opening the door to a "substantial debate to see if there is consensus to simplify them".

The stability and growth pact was approved in 1997 and establishes economic constraints for the 28 countries of the European Union, in particular for the 19 Eurozone countries: a public deficit not exceeding 3% of GDP and a public debt above below 60% of the Gross Domestic Product. Some EU countries do not respect either the deficit / GDP cap, or the public debt, which is the case in Italy around 132%. That is why we must "continue with the use of flexibility, in particular to allow us to react to situations of potential economic slowdown".

Dombrovskis, who currently holds the position of vice president responsible for the euro, stressed the need to guarantee "European economic sovereignty" with "strong national economies that carry out" and "reforms that create fiscal buffers in periods of growth to be used when there is a slowdown ".



Small medium-sized companies in Europe
The Commission of Ursula von der Leyen, which will begin on November 1st, will propose the creation of a fund "to help Small and Medium Enterprises to list or raise funds in the capital market", explains Dombrovskis during his hearing. According to the Latvian, the SMEs are the "backbone of the European economy, because their innovative capacity and talent are vital assets for Europe's economic sovereignty. But too often they move abroad to grow". This is an important reason why, according to Dombrovskis, "there is a need for the Capital Markets Union".

Minimum wage and Golden rule limited
In the hearing the Latvian spoke about the European minimum wage that "will be the first proposal, with a transition to green and digital, looking at the social in an equitable way, without leaving anyone behind".

Dombrovskis, former European Commissioner for financial services under President Jean-Claude Junker, said he was in favor of discussing a "Golden rule limited" to exclude some investments from the limits on the deficit in the stability and growth pact. In September, the European Fiscal Board - the group of essays that verifies how the Commission applies the pact - proposed to simplify the budget rules, replacing the structural deficit criterion with a ceiling on the increase in expenditure in relation to the nominal growth of the GDP.

To finance the transition to a climate-neutral economy, "Europe needs massive investments: trillions of euros in the next decades, both public and private funding" closes Dombrovskis. After him follow the auditions of the Danish Margrethe Vestager and the Dutch Frans Timmermans, respectively designated for the digital and precisely, for the green deal.