Brussels wants to propose to each Member State a reference budgetary trajectory over four years, adapted to its situation, in order to put it on the path of a “credible reduction in its debt”.
by Virginie Malingre (Brussels, European Bureau)
“The stability pact is stupid”, said, in October 2002, Romano Prodi, then president of the European Commission. That was twenty years ago. Since then, the crises have followed one another, the community budgetary framework has been amended, but its philosophy has not been substantially modified, while the question of its relevance and its effectiveness remains complete.
Wednesday, November 9, the commission presented the main lines of what could be an in -depth reform of this text under which the public deficit should not exceed 3 % of the gross domestic product (GDP), when the debt must Stay contained at less than 60 % of national wealth, and which frames public finances of member states since 1997.
At the time, he was intended to converge budgetary policies within the future euro zone to prepare for the arrival of the single currency. Since then, the monetary union has emerged, it has grown and survived a lot of turmoil, but the stability and growth pact has assured twenty-seven neither a level of sustainable debt nor an economic activity supported. “We have not invested as we should have, [and] deleveraging failed,” notes the economy commissioner, Paolo Gentiloni.
unrealistic objectives
of great complexity, accompanied by very heavy and therefore not very credible sanctions, carrying unrealistic objectives, the stability pact has not proven itself. The crisis linked to the COVID-19 and the war in Ukraine, which saw the twenty-seven multiply their expenses to help citizens and companies to face, have completed the demonetize it: it has been suspended since March 2020 and in principle until ‘At the end of 2023.
At the end of 2021, debt within the European Union (EU) represented, on average, 88 %of GDP – 14 countries were above 60 %, including France (113 %) and Germany – , and this ratio went from 17.6 % to Estonia to 194.5 % in Greece. The situation is not about to improve: against the backdrop of war in Ukraine and the outbreak of energy prices, the twenty-seven will also have to, if they do not want to be permanently relegated behind the States- United and China, investing massively in ecological and digital transitions.
Twenty-five years after the birth of the stability pact, there is today a consensus in Europe to make it evolve. The community executive thinks possible to find a way so that European economic governance improves, even if the totemic rules of 3 % and 60 %, inscribed in the treaties, are not intended to disappear. “Financial stability and growth can only go hand in hand,” comments Paolo Gentiloni.
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