Stability Pact: the European Union will review its fiscal rules

The President of the European Commission Ursula von der Leyen, October 18, 2021 in Brussels.

AFP - YVES HERMAN

Text by: RFI Follow

1 min

It is a site that promises heated debates.

The European Commission is launching a public consultation on the reform of the Stability Pact on Tuesday, October 20.

Final objective: to review the budgetary rules that the EU imposes on Member States by the end of next year and to think about simplifying the Stability and Growth Pact. 

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The Stability and Growth Pact imposes deficit and public debt limits on states in the euro zone.

It must be reactivated in 2023. But its respect by a certain number of member countries seems illusory as the debt has soared, in Greece and Italy in particular, but not only. 

The average debt of euro-zone countries is around 100% of GDP, well above the 60% limit authorized in the pact adopted in 1997.

Most of the Union's finance ministers consider the budgetary rules too strict for the post-pandemic world.

However, there is no agreement on the method.

Is a simple interpretation of current texts enough?

Or do they have to be completely rewritten?

The question is not settled. 

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Green investment 

The other issue is the financing of the energy transition.

Governments will have to find hundreds of billions of euros to achieve carbon neutrality by 2050. In this perspective, France and Spain, for example, wish to exclude this expenditure from the budgetary rules. 

Problem: There is no consensus on the definition of what a green investment is.

And some countries consider the pact flexible enough as it stands.

Discussions could go on. 

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