At the Eurogroup meeting in Tallinn on 15 September, the Eurozone finance ministers will discuss the possibility of revising the rules of the preventative plank of the Stability Pact, the Commissioner for Economic and Financial Affairs, Pierre Moscovici, told the press on Tuesday 5 September.
Moscovici repeated his calls for simpler and clearer rules in the framework of the preventative bank of the pact. Although the current legal framework commits the member states to an annual structural adjustment 0.5% of GDP, a certain flexibility in the application of the rules could be up for debate.
The rules in force have already attracted criticism, for instance from Italy, due to the calculation methodology used by the Commission to assess the output gap in the member states (see EUROPE 11782). In the framework of the potential revision of the rules, the Commissioner reiterated that he was calling for a positioning that is “smart rather than dogmatic”, along the lines of the debate on the corrective plank held early in 2015.
To justify this approach, Moscovici presented a few budget deficit figures for the EU. This stood at 6.1% of GDP in 2010, when 24 countries were under excessive deficit proceedings, yet is expected to stand at 1.4% of GDP this year.
Moscovici also expressed confidence in Spain and France limiting their budgetary deficit to 3% of GDP in 2017. If they do so, all member states will leave excessive deficit proceedings next year. Readers may recall that the Eurozone countries must present the European Commission with their 2018 budgets by 15 October of this year.
In light of the strengthening recovery in all member states, the Commissioner suggested that it may be time to consider building some flexibility into the application of the preventative rules of the Pact in order to support growth. Growth for 2017 has already reached 1.7% of GDP and this suggests that it will be nearly 2% of GDP this year, he said, arguing in favour of a budgetary policy at European level that combines budgetary rigour with economic growth.
At the European Parliament, French socialist Pervenche Berès expressed her approval of the forthcoming debate. “We have known for some time that the member states moving from the corrective plank of the Pact to the preventative one have the hardest job. Any proposal for a more 'enlightened' interpretation of the Pact, in other words a more flexible one, is welcome, as per the 'Berès I' report and the Commission's communication on flexibility, both of which were adopted in 2015”, the MEP told EUROPE in a written statement (our translation). She goes on to stress that “continuing to hold all the member states in the preventative plank to a pronounced structural effort would slow the return to the positive aggregate Eurozone budgetary position the Commission is calling for in order to stimulate recovery and investment”. She concluded by saying that the debate would inevitably throw up the more general question of Eurozone governance and its own fiscal capacity. (Original version in French by Lucas Tripoteau with Mathieu Bion)