Representatives of the Member States of the European Union and the European Parliament have reached an agreement on more flexible new rules for budget deficits and national debts, the European Parliament reported in the night from Friday to Saturday. Countries will have more time to reduce their national debt and also more room to invest in matters such as greening and digitalization.
The current budget rules, whereby the national debt may not exceed 60 percent of gross domestic product and the budget deficit may not exceed 3 percent, have never been enforced. For example, important member states such as France and Italy still have a much higher national debt than 60 percent. The new rules are more flexible and allow for customization, giving countries with excessive national debt more time to regain financial health. But the standards of 60 percent and 3 percent will not be compromised. In December, European Finance Ministers had already agreed on the reform of the budget rules.
Compromise
“A new economic framework was urgently needed,” said European parliamentarian and co-negotiator Esther de Lange (CDA) in a press release about the agreement. “We have taken our responsibility to ensure that the new fiscal rules are solid and credible, but also leave room for necessary investments.” It was De Lange’s last major job as a European parliamentarian, because she will become the new chief of staff of European Commissioner Wopke Hoekstra from February 15.
The agreement in principle is a compromise between countries that advocate a strict budget policy, such as the Netherlands and Germany, and countries in the south of the EU in particular that want to be more flexible with finances. The agreement still needs to be approved by the full European Parliament and all individual member states. That would be just in time for the European elections in June.