The European Fiscal Board set out four areas of work for reforming European fiscal rules in its third annual report, published on Tuesday 29 October.
The experts of this committee note the difficulty for the step of imposing sanctions on euro area countries that reportedly deviate significantly from the agreed budgetary path, in particular because the Commission and the EU Council applied the rules with a margin of political discretion, as was the case during the tense negotiations with the previous Italian government.
Four avenues for reform of the Stability and Growth Pact are therefore being suggested: – “a radical simplification” by using a single indicator – an expenditure rule linked to a debt target – combined with a general escape clause based on independent analysis; – “a targeted Golden Rule to protect productive public spending in times of fiscal consolidation”; – the introduction of debt targets that would differ from state to state depending on factors such as the costs associated with population ageing; – “strengthening the governance of the rules” of Economic and Monetary Union order to further separate political decisions from economic analyses (e.g., removal of the reverse qualified majority rule in the EU Council, stable presidency of the Eurogroup).
See the annual report: http://bit.ly/34i2ajU (Original version in French by Mathieu Bion)