After two years of negotiations, the Twenty-seven agreed on the evening of Wednesday December 20 for a relaxation of the stability and growth pact, twenty-five years old and “deactivated” since 2020 during the Covid crisis. 19. From now on, member states will have to adhere to new European budgetary rules “more realistic”as assured by Nadia Calvino, the Spanish Minister of the Economy, whose country presides over the European Union until December 31.
The reform will not touch the historic totems of the stability pact: each country will still have to respect the limit of a deficit of 3% of its GDP and a debt of 60%. “The stability policy is strengthened”, reacted the German Minister of Finance, Christian Lindner. However, the adjustments necessary to comply with the rules will be less brutal for the countries most in difficulty, as is the case in southern European countries.
“This agreement is excellent news for France and Europeassured Bruno Le Maire, the Minister of Economy and Finance. For the first time, this pact will recognize the investment efforts of States in decarbonization and in defense, which are essential in the coming decades to defend Europe’s place; and structural reforms, such as those of unemployment insurance or pensions. »
For Sigrid Kaag, the Dutch Minister of Finance, one of the so-called “frugal” countries, the new rules “must be better respected, which has too often been a problem in the past. »
The compromise between the highly indebted countries of the south of Europe and the “frugal” ones, rather in the north, took a long time to emerge, but an agreement on the calibration of all the indicators between France, Germany and the Italy, found Tuesday evening, helped facilitate Wednesday’s final decision between the Twenty-Seven.
“Transitional flexibility”
The reform, which must still be negotiated with the European Parliament probably from January, must be completed before the end of the mandate of the current Commission, in the summer of 2024. The rules will nevertheless apply for the entire the year. States will have to present their own adjustment trajectory over a period of at least four years in order to ensure the sustainability of their debt, a period which can be extended to seven years in the event of reforms and investments in the priorities of the European Union.
All countries with excessive deficits – beyond 3% of GDP, which should concern France for the next two years – will be forced to make a minimum effort to reduce the deficit ratio by 0.5 points of GDP per year. By 2027, if the debt burden were to increase too much with the increase in refinancing rates, the effort could be less. “This transitional flexibility will allow us to achieve our investment objectives”assures Bercy.
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