EU finance ministers want to simplify budget rules – disagree on how

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The EU’s finance ministers agree that the EU’s budget rules should be simplified and that compliance with the rules must be improved. But then, opinions still differ sharply between northern budget hawks and southern budget doves about how it should happen.Published: September 10, 2022, 7:29 p.mIt appeared at the ecofin meeting discussion on Saturday on the reform of the Stability Pact. The discussion took place against the background of high national debts in many EU countries, a slowdown in growth, the need for energy support and large investments. In addition, German sources pointed to the danger that the Italian election on September 25 could bring right-wing populists with weak budgetary discipline to power in Italy. consensus around these priorities: Make sure that public debt is really reduced, especially high debt, be careful with the composition of public spending, reduce complexity and improve compliance,” said Commission Vice-President for Economics Valdis Dombrovskis at a press conference after the meeting.The main objective of the budget rules is persistent government debts, he says. The new rules should take into account the different situations of EU countries and increase the flexibility of how the rules are complied with. “A single, easy-to-understand target is better, like a spending ceiling,” says Valdis Dombrovskis. France advocates that each country should draw up an own plan to reduce high budget deficits. These plans must be adapted to each country’s conditions. For example, the pace of reducing the deficit may vary even if the end goal is to be the same for all countries. The Netherlands proposes that the assessment of EU countries’ compliance with the budget rules be moved from the Commission to an independent board. The reason is that the Netherlands is dissatisfied that France and some other countries have received a mild assessment when these countries have exceeded the deficit limit of 3 percent of GDP.Another point of contention between The EU countries are whether green or other important investments should be exempted from the budget deficit or not. Germany and other northern countries say no, while France and other southern countries say yes. Sweden is firmly entrenched among the budget hawks. Sweden believes that the main problem is that the budget rules have not been followed. So instead of discussing changes in the rules, it would be better if the existing rules were really complied with, Sweden believes. And if any relaxation of any part of the rules takes place, Sweden wants it to be compensated by strengthened requirements for compliance.A relaxation of the rules that is being discussed is to drop the requirement to reduce high national debts by one twentieth per year. The reduction applies to the part of the debt that exceeds the pact’s limit of 60 percent of GDP. Valdis Dombrovskis has said that this rule should be changed. When the corona pandemic broke out, the EU’s budget rules were suspended through an exception clause. This suspension has been extended until 2023. Valdis Dombrovskis said that it may be possible to have new rules in place towards the end of 2023. But it depends on whether the EU countries can agree.

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