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Why is the European Union giving up on budgetary rules?

Carole Ferry, edited by Ophélie Artaud

Due to the Covid crisis, the war in Ukraine and the soaring energy or food prices, the budgetary stability pact imposed on member countries of the European Union is suspended until the end. next year, the European Commission announced on Monday. The objective is to allow countries to have more flexibility and to continue to invest in their economy.

The return to more budgetary rigor for the countries of the European Union (EU) will have to wait a little longer. Since March 2020, the stability pact has been suspended and it will remain so throughout 2023, the European Commission announced on Monday. The States will therefore have no obligation to fall below 3% of the public deficit.

Offer “room for maneuver to national budgetary policies”

At issue: the Covid crisis and the war in Ukraine. Without forgetting the fact that Member States also have to deal with soaring energy and food prices, but also supply disruptions that affect both households and businesses. For them, this is therefore not the time to return to overly strict budgetary rules. Because that would run the risk of stifling growth.

“We propose to maintain in 2023 the general safeguard clause”, which makes it possible to temporarily derogate from the limits of debts and deficits fixed by the Stability Pact, declared the Vice-President of the Commission, Valdis Dombrovskis, during a press conference. “This provides leeway for national fiscal policies to react quickly when needed.”

The objective is to allow countries to have more flexibility to continue to invest and support their economy. Additional expenditure will therefore be authorized, but only for the priorities set by Brussels. This concerns in particular the energy transition, the digital transition, the investments necessary to get out of dependence on Russian gas and oil or even aid for the people most vulnerable to inflation.

The European Commission plans to check how the money will be spent next autumn.

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