After weeks of negotiations, six trilogies and one last 16 hour marathon the representatives European Parliament and the Council We managed to close it around two o’clock this morning interim political agreement about another of the legislature’s important files: new architecture EU tax rules starting a new phase more flexibility not only for governments, but also for tighter budgets And stringent deficit and debt reduction requirements, just like Germany demanded.d
The reform, which must be formally approved by the Council and the European Parliament in the coming weeks, preserves two pillars of the European Union. Stability and Growth Pact: Maximum ceilings of 3% for the public deficit and 60% for the debt relative to GDP. According to the governments, the new system will allow rates to be reduced in a “gradual, realistic, sustainable and advantageous” way while “protecting reforms and investments in strategic areas such as digital, green, social and defence”.
As Twenty-Seven Countries agreed in December, each country will design and agree with Brussels national multi-annual adaptation plans. These will be based on a technical trajectory that the European Commission will propose to Member States with deficits and debts above the threshold. This trajectory will show how this will be achieved at the end of the process. four-year adaptation period public debt appears to be in a reasonable downward trend or at prudent levels. Countries committed to reform and investment in priority areas to increase growth potential, extended to seven years adaptation period.
“The new rules will significantly improve the existing framework and provide effective and enforceable rules for all EU countries. They will preserve balanced and sustainable public finances, strengthen the focus on structural reforms and stimulate investment, growth and job creation across the EU,” said the Belgian Minister of Finance and current chairman of Ecofin, Vincent Van Peteghemreached an agreement that it described as balanced. “These will provide more space for investment, give Member States flexibility to facilitate their adaptation and strengthen the social dimension. In addition to greater ownership, on a case-by-case basis and with a medium-term approach, Member States will be better equipped to avoid austerity policies” , underlined the socialist MP Margarida Marques. Diplomatic sources emphasize that the negotiations were developed in a “constructive” spirit.
Deficit and debt guarantees
The Council has reached the final stage of negotiations with the European Parliament with very little time left. “maneuver space” After a very difficult contest with Germany and the thrifty countries that forced the remaining member states to introduce measures that would limit the margins of governments, also in the preventive arm of the Pact. The final agreement preserves the measures adopted by the Twenty-Seven to guarantee deficit and debt reduction. This means that countries with excessive debt will have to reduce this level by 1% per year if their debt exceeds 90% of GDP, and by 0.5% if their debt is between 60% and 90% of GDP. As highlighted by the European Parliament, these provisions are less restrictive than the current framework, which requires each country’s debt to be reduced by one twentieth annually when it exceeds 60%. In terms of maintaining the current account deficit, governments will also need to reduce the deficit to 1.5 percent to create a buffer against future crises.
To persuade France And Italy It has also introduced some exemptions to ensure this. more gradual adjustment. Furthermore, at the request of a Member State, the Council may allow a country to deviate from its spending path if exceptional circumstances beyond its control lead to a significant impact on public finances. “A period for such a deviation will be set, but this period may be extended if exceptional circumstances persist. The extension will be for a maximum of one year and may be granted more than once,” the European Parliament said in a statement. emphasizes that they have succeeded in strengthening social dimension, In the process of monitoring public accounts. The European Parliament underlines: “The Commission will measure both the implementation of the principles of the European Pillar of Social Rights and the risks to social convergence” and “Member States must ensure that their national plans also contribute to social objectives”: Cyclical elements of unemployment benefit expenditure when calculating a government’s expenditure will not be taken into account.