This archive report was first published on 8 December 2019.
December 8, 2019 - The European Union's budget rules, established in response to the financial crisis, are facing a long-overdue review. EU Commissioner Paolo Gentiloni has called for a rethink of the rules, which limit budget deficits to three percent of GDP and overall debt to 60 percent of GDP.
Speaking to the German daily Sueddeutsche Zeitung, Gentiloni emphasized the need for updated rules that take into account the EU's new challenges, including climate change and the risk of prolonged low growth and low inflation.
"We have different challenges now: the fight against climate change and the danger of having low growth and low inflation for an extended period," Gentiloni said.
The EU's Growth and Stability Pact has been criticized for being too rigid, with some countries struggling to comply due to massive debt mountains. French President Emmanuel Macron has also weighed in, arguing that EU states need more flexibility to invest in growth and combat downturns.
"We need more expansionist policies, to invest more. Europe cannot be the only area not to do it," Macron told The Economist.
Gentiloni plans to launch consultations on the pros and cons of the rules, with a view to proposing changes in the second half of 2020. Italy, one of the EU's most heavily indebted countries, has been a vocal opponent of the current budget rules.
