The idea from France and Italy to reform EU budget regulations in order to stimulate business and promote long-term growth needs to meet with interest among member states as the bloc crisis escalates.
Mario Draghi, Prime Minister of Italy, and Emmanuel Macron, President of France, wrote in the Financial Times that loans provided to help set priorities should be “favored by financial law”.
While EU member states need to reduce their debt, spending on key priorities “will help keep debt stable over time,” they argued in an FT article.
“Our approach is to reduce wasteful spending on positive people through positive change,” they wrote. “And, just as the laws should not be allowed to prevent us from responding to the epidemic, they should not stop us from making all the necessary money.”
Franco-Italian intervention comes at a time when the European Commission is making it public negotiation on how the Stability and Growth Pact (SGP) can be changed after the rules are changed following a temporary suspension imposed by the Covid-19 plague.
Economists and other policymakers say the current system will not be able to cope with rising debt and the increasing incomes of Europeans in the coming years.
France and Italy have not said in detail what the new SGP should look like, but some economists have been arguing that a “gold law” should be set up to allow some funds – for example in green projects – to be deducted from deficit or debt. counting. One EU ambassador warned, however, that northern cities would “dig” and oppose anything that could be offset by public spending laws, in favor of further SGP reforms.
Rome and Paris also said that the € 800bn NextGenerationEU loan fund – with the help of non-alignment lending to EU member states – could be a “blueprint” for future collaborative projects in the same way.
Negotiations on certain changes to the SGP will grow early next year, and officials expect it to end in the first half of 2022 with France under EU leadership.
The northern European countries remain skeptical of value propositions, fearing they could lead governments to neglect large amounts of human debt.
In a letter to the Dutch parliament earlier this month, Finance Minister Wopke Hoekstra pointed out to European Commission officials that the gold standards do not work to boost public finances, and that they are extremely difficult.
The forthcoming Dutch alliance has stated that it remains “committed to sound and sound economic principles and to the significant transformation of its member states, which are aimed at sustainable debt, economic growth and transformation”.
The role of the new German union government will be difficult – and officials are expecting clear signs. Politicians in Berlin have remained negotiation ways to earn money without breaking national debt, including ways to earn money – a debate that is being explored in some businesses.
The member states of Frugal also contributed to the stability of NextGenerationEU, and did not show any interest in initiating a debate on the proposed solution.
The eurozone commissioner said any SGP weakening could undermine the creditworthiness of the debt collector by eradicating the trust between the so-called debtor and the debtor. “Excessive financial instability should lead to fewer responsibilities,” the ambassador said.
Valdis Dombrovskis, Vice President of the European Commission, he tells of FT this week that it was ready to explore the concept of a “green gold law” that undermines economic laws in favor of other groups of green goods.
But he also stressed that the most important thing for the EU should remain to reduce debt for all. “Obviously when we look at ways to reduce debt, it affects all people’s debt – not government debt,” he said.