Agreement of the Twenty-Seven on a reform of the budgetary rules of the European Union
On the night of Friday February 9 to Saturday February 10, 2024, the European Parliament and EU Member States reached an agreement on a reform of the Union's budgetary rules. This is supposed to modernize the Stability Pact by guaranteeing the recovery of public finances and while preserving investments.
In the European Parliament. On the night of Friday February 9 to Saturday February 10, 2024, MEPs and Member States reached an agreement on a reform of the European Union's budgetary rules. AFP - JULIEN WARNAND
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The agreement reached last night between the
Twenty-Seven
will allow Member States to apply the new rules this year for their 2025 budgets. The text, discussed for more than two years, is however criticized for its great complexity and ridiculed by left-wing elected officials as a tool installing austerity in Europe. Pressed for time, the negotiators finally reached an agreement after sixteen hours of discussions. Given the procedural delays, it was absolutely necessary to conclude so that the text could be voted on in plenary session in Strasbourg in the spring before the parliamentary break which precedes the European elections in June 2024.
Modernizing the Stability Pact
The new rules “
will contribute to the balance and viability of public finances, structural reforms, the promotion of investments, growth and job creation in the EU
”, affirmed the Belgian Presidency of the Council of the EU on X (formerly Twitter). The reform intends to modernize the stability pact, created at the end of the 1990s, which limits the public administration deficit for each country to 3% of GDP and the debt to 60%. Considered too drastic, this framework was never really respected and was considered obsolete.
While nevertheless confirming these emblematic ratios, the new text makes the adjustment requested from European Union countries in the event of excessive deficits a little more flexible. Concretely, it provides that States present their own adjustment trajectory in order to ensure the sustainability of their debt, giving them more time if they undertake reforms and investments. The management would focus on the evolution of expenditure, an indicator considered more relevant than deficits which can fluctuate depending on the level of growth.
The “frugals” have toughened the text
But Germany and its so-called “frugal” allies managed to tighten this budgetary framework by imposing a minimum quantified effort to reduce debt and deficits for all EU countries, despite the reluctance of France and the 'Italy. These modifications have partly distorted the project, supported by Renew and a large majority of social democrats (S&D), and have greatly complicated the text, say the Greens and certain S&D elected officials who reject it outright, just like the radical left. These elected officials denounce a return to austerity after three years of suspension of European budgetary rules in the face of the shock of the pandemic and the war in Ukraine.
(
With AFP
)
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