EU Commission wants to ease debt rules

The EU Commission presented proposals for a reform of the European debt rules on Wednesday. Under the new rules heavily indebted states will be given customised options for reducing excessive public debt. This would represent a major departure from the current principle according to which the same rules apply to all member states. Some media voice approval for the initiative but others question whether a consensus can be reached here.

La Repubblica (IT) /

More flexibility than before

This is a radical step that will benefit Italy, says economist Carlo Cottarelli in La Repubblica:

“It is likely that Italy will be required to make a more gradual adjustment than under the previous rules. The latter required the government debt-to-GDP to be reduced by 4 percentage points per year. Under the new rules, the main specification is that the government debt-to-GDP ratio must drop within 4 to 7 years (by how much is not stipulated) and be put on a ‘plausibly downward path’.”

Carlo Cottarelli
Handelsblatt (DE) /

The same rules must apply to all

The German government must not agree to this proposal, urges the Handelsblatt:

“If the bill were to pass, the debt rules in Europe would effectively be suspended. The proposals pose an incalculable risk to the survival of the euro. The EU Commission wants to agree individual, tailor-made debt reduction programmes directly with EU states. And that’s precisely the problem: debt reduction becomes a negotiable matter instead of being governed by clear, universally applicable rules.”

Martin Greive
The Irish Times (IE) /

A balanced but divisive compromise

It will be difficult to reach a consensus on the new rules, comments The Irish Times:

“The commission has just put forward a generally well-balanced proposal. But already big member states are at odds on what should happen, with Germany’s finance minister, Christian Lindler [sic], criticising the commission’s latest proposals as not being sufficiently strict. Other major players, notably France and Italy, take the opposite view, arguing that more leeway is needed to take account of vital climate investment. ... The commission has tried to take a middle road, proposing more leeway to allow countries to boost investment, but also rules obliging countries with higher national debts and budget deficits to reduce them at a prescribed rate.”