Luxembourg — The European Commission announces its impact on EU budget rules on October 19 when it begins discussions on assessing the economic impact of a pandemic on the European economy and how to change the rules that underpin the euro currency. To do.
The EU Budget Regulations, called the Stability and Growth Pact, place restrictions on government borrowing to protect the value of the euro currently used in 19 EU countries. They have been suspended until 2023 to give the government room to fight the coronavirus pandemic.
“The European Commission will adopt communications on October 19 to assess the impact of the crisis and its impact on the review of economic governance,” European Commissioner Paolo Gentiloni said in a press conference. ..
“We need extensive and comprehensive involvement with all stakeholders in order to reach a consensus to move forward in time for 2023,” he said.
After three revisions since the euro was founded in 1999, the rules have become more complex and need to be reviewed.
Many governments are also calling for simplifications and updates to the changing economic reality more than 20 years after the original framework was created.
“We build the discussion with lessons to be learned from the pandemic,” Gentiloni said. “We have suggestions for next year,” he said, saying the window of opportunity was limited by the rules scheduled to be revived in 2023.
Gentiloni said one of the issues that must be addressed in the review is how to deal with the huge amount of public debt that the government has accumulated during the pandemic.
Current regulations stipulate that government deficits must not exceed 3% of GDP and debt must not exceed 60% of GDP. If you have a lot of debt, you need to reduce the excess by more than 60 percent each year.
However, since the average government debt in the euro area is now 100% of GDP, such a rule is no longer practical, while the Commission guarantees the market that the debt in the euro area is sustainable. , You need to find a way to acknowledge that reality.
Many policy makers have also invested in the special status of the revised rules as Europe embarks on a large-scale program to transform the economy to reduce CO2 emissions to zero by 2050. Insists that should be included.
By Jan Strupczewski