\n \n \n “. concat(self. i18n. t(‘search. voice. recognition_retry’), “\n
* EU debt regulations have replaced several times
* But designed to deal with overlapping crises
* Finance Ministers to discuss new reform
By Jan Struczewski
BRUSSELS, Sept 8 (Reuters) – The European Union’s tax rules, Byzantine, politicised or simply stupid, have been given many names and repeatedly replaced. they were not designed.
EU finance ministers will kick off the debate on Saturday, facing higher debt after two years of supporting economies, the COVID-19 pandemic and desires for massive investment to save it from the latest climate crisis.
To make matters worse, they are also facing a cost-of-living crisis with record inflation, rising energy prices as Russia cuts off Europe’s fuel source, and an approaching recession that is already draining billions from government coffers in various measures and more. sure to come.
EU rules, conceptually anchored in the era of greater economic soundness known as the “Great Moderation” in the 1990s and aimed primarily at preserving that of the euro by restricting government borrowing, are suffering to cope with all this.
They say that the public debt will have to be less than 60% of the gross domestic product (GDP) and the public deficit less than 3% of GDP.
But the pandemic has left many countries with debt well above one hundred percent of GDP, with Greece at around 185% and Italy at around 150%, and deficits by 2021 twice the EU limit.
This causes many governments to adhere to the EU rule that they will have to reduce debt each year to one-twentieth of the difference between its current point and 60% of GDP.
The positions of France, Italy, Germany, Spain and the Netherlands, as well as senior EU officials, imply that the 1/20 rule will have to disappear, either explicitly or because governments and the Commission agree not to apply it.
But it is not known through what it can be replaced. Berlin believes that governments simply reduce their structural deficit each year through at least 0. 5% of GDP until they achieve equilibrium. This, combined with economic growth, would pay off the debt.
“The maximum final result probably maximum is that we will get something very similar to the German position,” said a senior eurozone official involved in the talks.
DEFICIT CALCULATIONS
Another sticking point is how to manage the burdens of billions of public investments needed to attract even more personal money, to first halve Europe’s carbon dioxide emissions by 2030 and then avoid them altogether until 2050.
France, Italy and Poland argue that the regulations also allow them to deduct from deficit calculations sums spent on defense or achieving technological sovereignty, as those investments will pay off in the future.
Germany does not want fast sectors to be excluded from EU deficit statistics, but is willing to extend the existing flexibility for governments making structural reforms or long-term investments. The scope and scope of such reform or investment is to be clarified.
The selection of benchmarks to measure fiscal efforts is also under discussion, as governments look for observable signals over which they have influence, rather than calculated and much-reviewed retrospective signals. And then there’s the debatable factor of the app.
Although fines are foreseen for those who violate the rules, they have never been used, although countries such as Italy, France, Spain or Portugal have done so blatantly.
Talks about adjustments are expected to take months, perhaps until the current quarter of 2023. Regulations will remain suspended next year to give governments leeway to economies from the energy crisis caused by Russia’s invasion of Ukraine.
The European Commission will provide its proposals on how the framework can be replaced in the current part of October, officials said, with the aim of publishing well after Italy’s snap election on Sept. 25, to make the debate an electoral factor in the eurozone. economy.
(Reporting by Jan Strupczewski; editing by Mark John and Emelia Sithole-Matarise)