Written by Fu Yun Chi
BRUSSELS (Reuters) – European Union member states and MEPs struck a tentative deal on Saturday to ease the region’s strict fiscal rules, giving governments more time to cut debt and improve climate protection. It provided incentives to increase public investment in change, industrial policy, and security.
The latest revamp of the 20-year-old rules, known as the Stability and Growth Pact, will see some EU countries increase spending to support economic recovery from the pandemic and see EU countries implement ambitious green industrial and industrial policies. The announcement comes after the company racked up record debt. defensive goal.
The new rules set minimum deficit and debt reduction targets, but they are less ambitious than previous numbers.
Valdis Dombrovskis, Vice-President of the European Commission, said: “In the face of significant economic and geopolitical challenges, the new rules will help EU countries cope with today’s new realities and provide EU Member States with the best prospects for the coming years. “It can give clarity and predictability to fiscal policy.” statement.
“These rules will improve fiscal sustainability and promote sustainable growth by encouraging investment and reform,” he said.
Commenting on the agreement, Margarida Márquez said: “With a case-by-case, medium-term approach and increased ownership rights, member states will be better equipped to resist austerity measures.”
Under the revised rules, countries with excessive borrowing will receive an average of 1% per year if their debt exceeds 90% of gross domestic product (GDP), and 0.5% per year if their debt pile is between 60% and 60%. % reduction is allowed. 90% of GDP.
Countries with budget deficits exceeding 3% of GDP are required to halve their budget deficits to 1.5% during periods of growth, creating a safety buffer for tougher times ahead.
Defense spending will be taken into account when the European Commission assesses the country’s large deficit, which comes in the wake of Russia’s invasion of Ukraine.
The new rules will extend the deadline for countries to reduce their debts and deficits from 2025 to seven years, up from the previous four years.
However, member states with excessive debt are not obliged to reduce their debt by less than 60% by the end of the seven-year period, provided there is a reasonable downward trend.
EU countries and the European Parliament must formally approve the interim agreement reached by negotiators on Saturday before it takes effect next year.
The deal was agreed on Saturday by negotiators from the EU Council of Ministers and the European Parliament. The preliminary agreement must be formally approved to take effect next year.
(Reporting by Foo Yun Chee; Editing by Clelia Oziel)