The agreement reached last night will allow member states to apply the new rules this year for their 2025 budgets.
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Pressed for time, the negotiators finally reached an agreement after 16 hours of discussions. The European Parliament and EU member states reached an agreement on the night of Friday February 9 to Saturday February 10 on a reform of EU budgetary rules intended to guarantee the recovery of public finances while preserving investments. The new rules, which will come into force for member state budgets in 2025, “contribute to the balance and sustainability of public finances, structural reforms, the promotion of investments, growth and job creation in the EU”affirmed the Belgian presidency of the Council of the EU on X (formerly Twitter).
Concretely, the reform intends to modernize the stability pact, created at the end of the 1990s, which limits the public administration deficit for each country to 3% of GDP and the debt to 60%. Considered too drastic, this framework was never really respected and was considered obsolete.
While confirming these emblematic ratios, the new text makes the adjustment requested from EU countries in the event of excessive deficits a little more flexible. It provides that States present their own adjustment trajectory, in order to ensure the sustainability of their debt, giving them more time if they undertake reforms and investments. The management would focus on the evolution of expenditure, an indicator considered more relevant than deficits which can fluctuate depending on the level of growth.
A quantified debt reduction effort
The text, discussed for more than two years, is criticized for its great complexity. It is also ridiculed by left-wing elected officials who denounce a tool installing austerity in Europe. Because Germany and its allies “frugal” have managed to tighten this budgetary framework by imposing a minimum quantified effort to reduce debt and deficits for all EU countries, despite the reluctance of France and Italy.
“We need investments in industry, in defense, in the ecological transition, that’s the urgency today, it’s not about bringing economically absurd rules up to date,” economist and S&D MEP Aurore Lalucq told AFP. She denounces a “political error which will be used by populists to attack Europe.
“A new economic governance framework was more than necessary. We ensured that the new budgetary rules were sound and credible,” declared MEP Esther de Lange (EPP, right), rapporteur of the text.