For what purpose are negotiations Reform of the Stability and Growth Pact rulesThe European Commission, which has been on hold since the outbreak of the covid pandemic in early 2020 and will re-engage in 2024, with or without reform, bore fruit this Wednesday. tax guidelines European governments should follow when designing stability and convergence plans send to brussels before the end of april. A transition exercise where Member States will have to change their public spending policies and act together “common sense”with the presentation of multi-year plans that include deficit and public debt adjustments.
deactivation general escape phrase continued at the end of this year. 3% public deficit and 60% debt targetThis will enable the European Commission to reconsider compliance with these two thresholds. Therefore, European governments, including the government led by Pedro Sánchez, will have to include in their programs the way in which they will ensure that reference values are respected, both in terms of deficit and debt.
In case of deficit, plans will need to guarantee budget deviation. below 3% GDP for the period covered, that is, by 2026 at the latest. In the case of debt, they will have to give a guarantee. reasonable and sustained reduction In the case of countries with “significant or moderate public debt problems”, as in the case of Spain, maintaining this at “prudent levels” over the medium term. According to the European Commission’s autumn economic forecasts, Spain will close the year 2024 with a 3.6% public deficit and 112.1% debt. For now, and given the high macroeconomic and budget uncertainty, Brussels confirms: excessive deficit transactions will continue unopened this year Although it opens the door to start doing it from the spring of 2024.
energy measures
The new guidance also suggests that governments gradually energy support measures To homes and businesses to mitigate the economic and social impact of the energy crisis, which Brussels forecasts 1.2% of GDP in 2022 and almost 1% this year. “If wholesale energy prices remain stable and lower energy costs are reflected in retail prices as currently projected, the government’s energy support measures should be phased out in 2024 and the associated savings should contribute to reducing public deficits,” says the Commission.
During. So much so that if energy prices rise again and it is not possible to suspend aid altogether, Brussels is urging governments to take “selective measures” to protect vulnerable homes and businesses. According to Brussels, this is the only way to reduce financial costs, promote energy savings and allow the economy to adapt gradually and sustainably for a limited time. “This is a message we have conveyed many times before, but we insist on this message so that Member States can improve their finances and free up resources to support the double transition,” said the Commissioner. Paolo Gentiloni.
Review in May
The European Commission will update the fiscal guidelines for 2024 by May 2023 at the latest when it presents recommendations by country, after analyzing the stabilization and convergence programs submitted by governments before 30 April, based on net primary expenditure. In this exercise, it will be Member States who propose their own financial means, which will then be examined and evaluated by Community technicians. As explained by Gentiloni, recommendations will include: qualitative guidance on investment and energy measures and one differentiated quantitative requirement Depending on Member States’ debt sustainability challenges.
“This is a delicate balancing act, because it is important now to move towards a reliable and robust framework,” the Italian insisted on one of the elements that would guarantee greater flexibility in the financial control system in line with the new tax reform. The rules of the Stability and Growth Pact, which the 27 are negotiating and that Brussels will propose legislation this spring, “The 2024 guidelines should be considered as a bridge between how the rules have worked in the past and how they may work in the future,” added the vice president. Valdis Domvrovskis.