In 2024, new tax rules and budget plans endorsed by EU member states will need to reflect adjustments in spending. This point was underlined by Valdis Dombrovskis, the European Commission’s economic vice president, as Ecofin ministers convened and received a one month window to resolve lingering disagreements ahead of their March 14 gathering.
The European Commission notes that the timetable for approving reforms to the Stability and Growth Pact is tight. It acknowledges the possibility that not every member state can finalize their 2024 budgets within the current framework. The aim is to steer public finances in a flexible way to meet growth, investment, and stability targets, including the 3% deficit ceiling and the 60% debt rule. Commission officials say budget guidelines should be ready by March 2024, though inflation and other pressures complicate the pace. The escape clause adopted during the pandemic in 2020 will no longer apply in 2024, meaning countries must chart their paths without contingency sanctions under the Stability and Growth Arrangement (PEC).
Lots of work to do
The Commission’s November proposal would grant member states more breathing room, allowing countries such as Italy, Greece, Spain, or France to pursue debt reduction while keeping a lighter, more automatic sanctions regime than currently exists.
Both Dombrovskis and Swedish Finance Minister Elisabeth Svantesson emphasized broad agreement on core principles and objectives for the EU’s new fiscal rules. Yet they warned that further work is needed to settle technical details. They urged continued discussion to reach maximum consensus at the next Council meeting. Svantesson spoke of progress but noted that a new framework must still be shaped to satisfy diverse viewpoints within the bloc. The presidency country for this term is steering the negotiations, helping to keep the dialogue moving toward convergence.
Differences between countries
The Commission will continue to support talks in the coming weeks and aims to present legislative proposals for the European Union at the March Council. Spain’s economics vice president Nadia Kalviño urged the Commission to advance the project promptly so negotiations can proceed as far as possible.
The debate among member states centers on balancing more flexibility for debt reduction with the need for budgetary stability. Some members argue that fiscal leniency is essential to sustain growth and accelerate green and digital investments, while others prioritize stable public finances to prevent setbacks. The Swedish finance minister acknowledged differing starting points, but insisted discussions should continue with an openness to compromise. The rotating EU presidency is leading the talks this term.
The German finance minister, Christian Lindner, arrived expressing caution about the unknowns of reform. He noted that the EU is at an early stage of aligning economic governance post-pandemic and amid energy pressures. Germany supports returning to healthy, sustainable public finances as soon as possible and seeks a credible path to reducing deficits and debt. While recognizing the investment needs for ecological transition, Germany argues for structural reforms and a credible medium-term plan, allowing some flexibility while ensuring debt and deficit reduction are grounded in real progress.
France’s finance minister Bruno Le Maire articulated a desire to define new rules in the coming months that would bring the Eurozone back to healthy public finances. He stressed the importance of investing in a decarbonized industry and combating climate change within a framework that earns broad consensus among member states. France reaffirmed its commitment to budget stability, noting that a spending review is underway and that sustainable public finances are essential as investments support the green transition.