EU finance ministers have today finalised the Council’s position on the reform of the EU’s economic governance rules.
According to the information available, the Council’s proposal would require member states to reduce their budget deficit by 0.25 – 0.4% a year – a slight improvement on the 0.5% proposed so far.
However, it also reduced the maximum headline deficit to 1.5% of GDP and included the necessity to reduce the debt to GDP by 1% a year for countries whose debt is more than 90% of GDP (France, Italy, Spain, Portugal, etc.). That means more countries would need to cut government expenditure.
The final text of the deal was not made available yet and there is not transparency on the budget decisions that each country would need to make according to the rules nor on the real flexibility countries would have in the first three years of the transition period.
Responding to today’s deal on new fiscal rules, ETUC General Secretary Esther Lynch said:
“This deal is bad news for millions of working people struggling with the cost of living.
“Some member states have begun to recognise the serious flaws in the proposed fiscal rules and are working to limit the damage.
“But this is still a fundamentally bad proposal that would push the European economy even further towards another recession.
“That would mean workers will be required to make sacrifices that will not have any positive effect on the sustainability of public finances.
“And it will leave Europe chasing savings at a time when we need to be increasing public investment to achieve a just transition to a green and digital economy.
“Taking a decision of this magnitude in a virtual meeting under the cover of the Christmas holidays is typical of the lack of transparency with which this process has been conducted.
“It is time for the Council to be transparent about what cuts and tax raises would be needed in member states to meet the new fiscal rules.
“It would be highly irresponsible for the EU institutions to complete this process without knowing exactly what their impact will be.
“The fight against austerity is far from over. Trade unions will now ramp up the campaign against austerity 2.0 as the proposed reform moves into the Parliament and final negotiations between the EU institutions.
“Europe needs fiscal rules which put the wellbeing of people ahead of arbitrary limits based on discredited ideology from the 1980s.”
