Brussels, 05/01/2015 (Agence Europe) - The local and regional authorities are concerned that the greater flexibility introduced to European accounting rules, which have been in force since September 2014, are proving a brake on public investment. 150 European regional delegates are calling for the European system of national and regional accounts (ESA 2010) to be revised, so that they can differentiate investment from operational spending.
Inspired by the Council of European Municipalities and Regions (CEMR), these delegates summed up their concerns in a joint declaration adopted on 17 December last in Rome (during the organisation's steering committee meeting). They are afraid that some of the European accounting provisions lead to a lack of investment at local and regional levels. Jacques Gobert, the president of the Walloon section of the CEMR, explained that, “since the local budgets are integrated in the national budgets in order to meet the thresholds of the Stability and Growth Pact and subsequent regulations of fiscal surveillance, local and regional authorities are forced to reduce their investments considerably”. The delegates are therefore calling for the ESA 2010 to be revised so that investment spending can be differentiated from operational costs and subsequently enable the public authorities to invest in the maintenance and improvement of their infrastructure and services. Delegates indicated that the new requirements had already had a negative impact on public procurement work orders.
The CEMR also regrets that these provisions were modified without consulting the regional authorities upstream and is afraid that when their opinions are expressed, they are not taken into account. The local and regional authorities are also able to boast of a lower rate of debt (in 2011 average local level debt stood at 5.9% of GDP and 7.1% of public debt) and that local debt was mainly used to fund investment. (MD)