BRUSSELS. The first obstacle is overcome. It was not one of those insurmountable ones, but the vote in the Chamber on the start of inter-institutional negotiations for the reform of the Stability Pact was still necessary, as announced, and the European Parliament confirmed its desire to try to provide the Union of new budget rules. It will not be easy. On the contrary, it will be a “tough” negotiation, admits the Portuguese MEP Margarida Marques, socialist, co-rapporteur of the text approved by a large majority (431 in favour, 172 against, 4 abstentions). Because the fact that there is a negotiation does not necessarily imply that the different souls in the European Parliament are willing to endorse what the Council has developed.
So much so that at the time of the vote the Greens, radical left, sovereignists and a good part of non-members also said “no” to the idea of trying to think about the future of economic governance, because the starting point is an approach considered too devoted to new austerity and little real growth. In this parliamentary verification, a distancing is also taking place between the two main opposition parties in Italy, with the MEPs of the Democratic Party supporting the opening of the negotiating table with the Council and Commission, and those of the 5 Star Movement instead voting against.
The majority parties, however, are compact. Brothers of Italy, Forza Italia and the League give strength to the Minister of Economy, Giancarlo Giorgetti, who welcomed the agreement between the states in the Council on December 21st, for rules that overall satisfy. “Yes” therefore from Fi, Fdi and Northern League, with the Northern League members voting in the opposite way for the occasion to their parliamentary group in Strasbourg (ID, against).
It must be said that there is no shortage of critical issues within the Democratic Party. Socialists in general will fight for greater guarantees of social protection. But in the end the Dem troop espouses the line of the European socialist group. “It’s better than going back to the old rules or not having them at all,” Marques says. “Any other statement is simply naive, unrealistic and dangerous.” It is therefore up to the person responsible for the dossier to criticize the Greens and the 5 Star Movement for their lack of responsibility. Because it is believed that this is not the “no” moment that is as simple as it is risky.
Paolo Gentiloni reminds us what is at stake. During the debate preceding the vote, the Commissioner for Economy recalls the geopolitical tensions in the Middle East, Ukraine and the Red Sea, with the resulting uncertainties. “This is not a time when the EU can go back to the old rules or have uncertainties about the budget rules.” Also because the financial markets must be incentivized to invest in Europe, rather than betting on its failure. The start of the negotiations is therefore welcome, with the favorable vote in the House immediately starting. Now, adds Gentiloni, “a compromise is needed quickly” if we want to provide the EU with new budget rules by the end of the legislature. Translated: an agreement is needed “by mid-February”.
We start from the Council’s approach. Among the safeguards introduced in the new pact, countries with a debt/GDP ratio above 90% will have to reduce this ratio by 1% every year, while for countries with a deficit/GDP between 60% and 90% they will have to cut it by 0.5% per year. Italy will therefore have to reduce its debt by one percentage point per year, like Belgium, France, Greece, Portugal and Spain. Then there is the deficit issue. It will not only have to remain within the 3% threshold in relation to GDP, but it will have to be reduced to create budget space to be used in the event of a negative economic situation, without further worsening the public finances. A fiscal space that would be 1.5% in relation to GDP. The EPP stands firm on these rules. “We need rules that are realistic and respected”, recalls Esther De Lange, on the occasion of the only round of explanations of vote. Whatever rules emerge from the negotiation, everyone, including Italy, will have to follow them.
“To ensure a minimum quantified debt reduction for Member States, we provide a concrete figure on the required annual debt reduction.” Of course, there will be flexibility for investments needed for the green and digital transition, and for defense spending. For Italy, a transitional clause remains in force, until 2027, which takes into account the increase in the cost of interest on the repayment of public debt securities following the increase in rates implemented by the ECB.