The European Commission has presented an updated Stability and Growth Pact. Its principle is to apply carrots and sticks to both spendthrift southerners and thrifty northerners, and to be flexible. While everyone is allowed to have public debt of up to 60% of GDP and a deficit of 3%, highly indebted countries have up to 7 years to reduce it, reports Euronews television channel .
“There is fiscal space in which member countries, including highly indebted countries, can negotiate to gradually reduce their debt over three more years plus 4 years of the initial plan. The condition for this is that they have investments in common priorities, that is to say the green transition and the digital transition”, declared the European Commissioner for the Economy Paolo Gentiloni, “I think that we will discuss with the Member States the possibility of adding defense to these investments.
The Stability and Growth Pact in its current form is suspended until the end of 2023 to allow governments to financially support households and businesses that have been affected first by the pandemic and then by the consequences of the Russian war in Ukraine . The European Commission now admits that countries like Greece or Italy, whose debts exceed 150% of GDP, will not be able to bring them back to the initial target in 20 years. But to compel EU capitals to fulfill their obligations, Brussels is proposing a new tool that will allow financial sanctions to be applied to member states more quickly than before.
“I see common ground, which is the realization that we need more progressive and differentiated ways to reduce debt, and we need fiscal space for investment. Everyone recognizes that.” , continued Gentiloni. famous details.”
These proposals will now be discussed for the first time in December at the level of ministers, among whom attitudes towards him are very different – some see it as a breach of financial discipline. A source from the European Commission told Euronews that the pact should not be expected before June next year, but in any case there is a broad consensus that it is in the interest of the euro area to avoid long delays in the face of growing pressure from external markets.