MEPs validate the reform of the European Union’s budgetary rules

The adopted text aims to modernize the Stability Pact, which limits the public administration deficit for each country to 3% of GDP and the debt to 60%.

It is a reform intended to guarantee the recovery of public finances of the Member States of the European Union while preserving investments. MEPs, meeting in plenary session in Strasbourg, voted on Tuesday April 23 to revise the EU budgetary rules. The text, fiercely negotiated for more than two years, obtained broad support from the three main political groups: the conservatives of the EPP, the social democrats (S&D) and the liberals (Renew).

The text will be applied this year by the Finance Ministers of the Twenty-Seven to prepare their 2025 budgets. The reform aims to modernize the Stability Pact, created at the end of the 1990s and which limits the public administration deficit for each country. at 3% of GDP and the debt at 60%. Considered too strict, this framework was never really respected and was considered obsolete.

While confirming these emblematic ratios, the new text makes a little more flexible the adjustment requested from EU countries in the event of excessive deficits, if they agree to investments and structural reforms. Above all, the effort will be adapted to their individual situation. Concretely, it provides that States present trajectories over four or seven years in order to ensure the sustainability of their debt.

A text contested by left-wing elected officials

The management will focus on the evolution of expenditure, an indicator considered more relevant than deficits which can fluctuate depending on the level of growth. LGermany and its allies have, however, obtained a minimum quantified effort to reduce debt and deficits for all countries with excessive deficits, despite the reluctance of France and Italy.

The new rules are “more flexible, more credible in their implementation” and they “will allow a gradual reduction in public debt without compromising growth”estimated the European Commissioner for the Economy, Paolo Gentiloni. The Greens, the radical left and certain S&D elected officials, for their part, denounce a return to austerity.

According to them, such an austerity policy will slow down investment and benefit populists, after three years of suspension of European budgetary rules in the face of the double shock of the pandemic and the war in Ukraine.