D.As expected, the rules on maximum indebtedness in EU countries will remain suspended in 2022 due to the consequences of the coronavirus crisis. The EU Commission announced on Wednesday that financial policy must continue to contribute to the economic recovery from the pandemic next year. However, it is expected that the requirements will apply again from 2023.
The so-called EU Stability Pact actually limits the budget deficit to three percent of economic output and total debt to 60 percent. Otherwise, countries must at least approach these values. In the past, however, the rules were repeatedly violated without any noticeable consequences. Due to the severe upheavals in the wake of the Corona crisis, the pact has already been suspended for 2020 and 2021.
According to the Commission, the EU member states should only consolidate their finances if the economic situation allows this. The expenditure would have to be carefully examined, however, and a focus must be placed on climate protection and digitization.
“We all know that budget deficits need to be brought down from exceptionally high levels this year and last,” said EU Economic Commissioner Paolo Gentiloni. However, this should not be at the expense of important investments in the future.
The financial policy spokesman for the Greens in the EU Parliament, Sven Giegold, spoke of a right and necessary step. “It would be wrong to save into the crisis.” In the medium term, a reform of the budget rules is needed. “Old debt ratios do not match long-term low interest rates.”