No Stability Pact even in 2021. And Macron wants to cancel it forever

The European Commission has announced that the Stability Pact, suspended after the outbreak of the pandemic, will not be applied even in 2021. But there are those, like France, who are already pushing to cancel old budgetary rules, such as the 3 deficit ceiling. %.

“The budgetary policies of the member states – reads a letter sent by Commissioners Paolo Gentiloni and Valdis Dombrovskis to Italy and the 27 EU countries – must continue to support the recovery throughout 2021” and “to prevent the consequences of the developments of the pandemic and its socioeconomic consequences, the general escape clause (the suspension of the Stability Pact), will also remain active in 2021 ”. When economic conditions permit, the two EU commissioners write again, “it will be possible to pursue policies aimed at obtaining prudent budgetary positions in the medium term.

The reference to a return of the Stability Pact, at least in the form that we have known so far, remains vague. And this is also because a group of countries led by France has been pushing for some time to seize the opportunity of the Covid-19 crisis to reform EU tax policy agreements and laws, focusing more on growth than in austerity. Also because, as recently admitted by the board of experts of the same EU Commission, the Stability Pact failed to cope with the previous economic crisis.

France, announced the French Secretary of State for European Affairs, Clement Beaune, will oppose the return to the Pact: “You cannot imagine launching the same” Stability and Growth Pact, which imposes rules such as a public deficit of 3% of GDP. “Do we need budget rules? Of course. Should we review them? Certainly too,” he said in an interview with the AFP news agency.

Words that could coincide with that part of the Commission that is recognized in Gentiloni, which has repeatedly defended the need for more expansive fiscal policies. While the opposition in the EU Executive could be Dombrovskis, considered an austerity hawk. That is why the letter sent with double signature by the two members of the Commission (letter that aims to ‘remind’ governments of the guidelines given by Brussels to the Recovery Fund and to the multi-annual budget) contains a series of balances between these different positions: Commissioners underline that, in national plans on the basis of which EU resources will be disbursed, the implementation of reforms envisaged by the Recovery Fund must be “taken into account”, but special attention must also be paid to quality of the budgetary measures taken and planned, in order to cushion the impact of the crisis, supporting recovery and strengthening resilience, taking into account the sustainability “of public finances.