Commercial presentation Update: 23/04/2024 15:48
Issued by: 23/04/2024, 15:48
Strasbourg – MEPs today approved the reform of the budget and debt rules of the European bloc. Under the new fiscal rules, member states should carry out national reforms, work on debt reduction and be more investment-friendly. The public finances of EU countries should also return to a sustainable level after the period of the covid-19 pandemic.
Among other things, the new rules provide for the fact that when setting EU goals in the area of reducing excessive deficits and indebtedness, the individual situation of individual countries will be taken into account more than before.
The reform of the Stability and Growth Pact was proposed by the European Commission in April 2023, the member states were originally supposed to vote on it as early as last October, in the end it was possible to find an agreement within the framework of the twenty-seventh at the end of December, an agreement was reached in the trialogue with the European Parliament in February this year. “The new rules will help achieve balanced and long-term sustainable public finances, implement structural reforms and support investment, growth and job creation in the EU,” the Belgian Presidency of the Council of the EU commented at the time.
The previous EU fiscal rules required that the public debt of the member countries did not exceed 60 percent of the gross domestic product (GDP). At the same time, budget deficits were not allowed to exceed three percent of GDP. However, Brussels suspended the validity of the pact in 2020 due to the economic effects of the covid-19 pandemic. Its refilling was later delayed by the energy crisis caused by the war in Ukraine.
Subsequently, the original rules were supposed to apply again, but most member states did not want to return to them, so new rules were negotiated. But two groups of states opposed each other, the north, including Germany, the Netherlands and also the Czech Republic, which promoted stricter rules for the highly indebted, and the south, including Italy and France, which was of the opposite opinion.
Finally, a compromise was reached and the new rules, which have been discussed for months, will be more flexible, but still count on the fact that countries that exceed a deficit of three percent of GDP should achieve an annual structural improvement of at least 0.5 percent of GDP.
Fiscal rules consist of a total of three standards, all of which were adopted by MEPs. The majority of Czech MEPs approved two regulations and a directive, only four MEPs from ODS and two from ANO abstained from voting on one of the standards. Only Kateřina Konečná (KSČM) and Ivan David and Hynek Blaško (both SPD) voted against in all three cases.
“The task of fiscal rules is not to prescribe to governments what and how they should or should not finance. But to prevent them from leaving behind huge debts. Let’s not repeat episodes that bring our budgets into crisis. Irresponsible management of one member of the union leads to problems for all,” he said Czech MEP Luděk Niedermayer, who participated in the negotiation of the standards. “I am very happy that the proposal, which also contained my manuscript, managed to be discussed before the end of the mandate of this parliament and was successfully confirmed by the plenary. I believe that the new rules will help irresponsible budget policies to threaten people’s lives less and not destabilize the economy of the European Union,” he added.
The rapporteur of the proposal, German MEP Markus Ferber from the People’s Group of the EPP, emphasized the importance of a responsible budget policy during today’s debate. “The previous rules did not work very well, many states did not comply with the set budget limits,” said Ferber, adding that thanks to stable finances, it will be possible to increase the competitiveness of the EU.
As another rapporteur, Portuguese MEP Margarida Marques from the Socialist Group, added, many believed that reforming the budget rules would be impossible, but in the end it was possible. “We all had to make concessions, many of which were difficult,” Marques said. The new rules are much better than the old ones, more flexible, more democratic, progressive and for the first time have a strong social dimension, she added.
According to the European Commissioner for the Economy, Paolo Gentiloni, a good compromise was reached. “We will gradually reduce the national debt and also protect public investments in the long term,” he said in today’s debate. Belgian MEP Philippe Lamberts from the Green faction, on the other hand, sharply criticized the new fiscal rules. According to him, they talk about economy, which will mean “a straitjacket for the member states”. “I ask that you reject these destructive proposals,” he said before the vote.
“It is necessary to control the indebtedness of the member states, on the other hand, it is also necessary to find some flexibility in how to respond to the international situation,” said Czech MEP Tomáš Zdechovský (KDU-ČSL, People’s Party of the EPP). In this context, he mentioned the importance of defense investments. “Member states must invest in security. We must face up to this obligation, the next step must be to be able to get European banks to support investments in our collective security, i.e. in defense,” he added.
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