Aïda Sánchez-Aquí Europa
The EU Economy and Finance Ministers, meeting yesterday by videoconference within the framework of the Economic and Financial Affairs Council (Ecofin), have reached an agreement to reform fiscal rules. The reform of the economic governance framework, one of the priorities of the Spanish Presidency of the Council of the EU, establishes new rules for deficit and debt control.
A pact between Germany and France this Tuesday night has allowed an agreement in extremis to be able to close the reform during the Spanish Presidency. These new fiscal rules come after a negotiation that has lasted months and seek to be more flexible than the previous ones, which have been suspended for almost four years due to the COVID 19 pandemic and the subsequent energy crisis and inflation.
Governments are the ones who will be able to decide, to a greater extent, at what pace they want to reduce their debt, to avoid, especially, the old austerity that had ended up harming their economies more than benefiting them. The 27 EU states want countries to continue investing even in times of crisis, although the countries in the worst situation will have to negotiate with the European Commission.
“The agreement on fiscal rules is important and positive news; It will give certainty to financial markets and reinforce confidence in European economies. The Spanish Presidency has led a negotiation process that has culminated today in the agreement of the finance ministers of the 27 Member States, thus fulfilling the mandate of the European Council,” said the First Vice President and Minister of Economy, Trade and Business, as well as the next president of the EIB, Nadia Calviño.
The new rules incorporate safeguards with reference thresholds for all countries in order to guarantee an effective annual average reduction of one percentage point in the debt ratio for countries with debt above 90% and 0.5% for those between 60% and 90%. A structural deficit fiscal margin of 1.5% of GDP below 3% in the preventive arm. A speed of adjustment of the primary structural deficit for these countries of 0.4% of GDP per year, which may be reduced to 0.25% in the event of an extension from four to seven years. The rules contemplate a transitional regime until 2027 that softens the impact of the increase in the interest burden, protecting investment capacity.
