EU countries need effective and credible debt rules

Clear rules, clear enforcement and a reasonable balance between reducing excessive debt and allowing for investments. This is how the EPP Group wants to reform the fiscal rules for EU Member States.

“With the current general escape clause coming to an end on 31 December, it is important to provide clarity about our new fiscal rules quickly. I am happy that the European Parliament is now taking its responsibility. We found a good balance between reducing excessive public debt and creating space for necessary investments,” said Esther de Lange MEP, lead negotiator on the reform of the Stability and Growth Pact, which the Parliament's Economic and Monetary Affairs Committee will vote on today.

The reform will reshape the European fiscal rules, which are the foundation of a healthy economy and the European monetary union.

“The EPP Group has pushed for a credible economic governance framework that is based on sound rules, compliance and enforcement. The new economic governance will be more country-specific but within an EU framework. For example, we managed to put a concrete figure on the required yearly debt reduction of 1 per cent debt to GDP for high-debt Member States. We also added a concrete figure on the maximum that Member States are allowed to deviate from their net expenditure path. These kinds of concrete safeguards help to ensure debt sustainability and a common EU approach whilst taking into account the different starting positions between Member States,” explained De Lange.

"The Parliament's proposal also provides room for the necessary strategic investments, both by being counter-cyclical in general and by giving special attention to these investments in specific parts of the report. However, this room is provided while respecting the overarching objective of debt sustainability. Sound finances and sustainable debt levels remain key, especially given the recent increase in public borrowing costs," she concluded.

Counter-cyclical policies cool down the economy in upturns and stimulate it in downturns.