According to the committee, the proposed package gives countries more room for the necessary investments. However, the European rules on budget deficits and public debt, which are legally established in the so-called Stability and Growth Pact (SGP), are not exaggerating.
“We are moving away from the one-size-fits-all approach”
The maximum public debt of 60% remains the norm
A budget deficit of no more than 3% of gross domestic product (GDP) and a maximum public debt of 60% of GDP remain the norm for euro countries. But the way to get there will be more modern and transparent, according to the committee. And the agreements that member states make with the commission on their budgetary policy will be respected, promises the day-to-day running of the EU.
The Netherlands was one of the pioneers of the idea of giving governments more say in their approach to debt. For the government, debt sustainability, transparency and enforcement are important conditions for accepting the proposals.
No more one size fits all
According to Vice President Valdis Dombrovskis, the general rules of the 1990s are obsolete. “We are moving away from that one-size-fits-all approach,” the Latvian said. Each member state must submit to the Committee its plans outlining its budgetary targets, planned expenditure and debt policies over a period of at least four years. These plans are then reviewed by the committee and must be approved by the finance ministers. Dombrovskis warns that countries that fail to comply with the agreements can be fined.
Tax rules were temporarily suspended shortly after the coronavirus pandemic began in 2020 to allow EU countries to support their businesses and citizens with impunity. The suspension was extended because the Russian invasion of Ukraine subsequently plunged the EU into an energy crisis and inflation soared.
EU countries agree that the reins should be tightened again gradually, but differently than before. Finance ministers want to reach agreement on the proposals by the end of this year so that the Stability and Growth Pact can be applied again next year.