Brussels – The opinions published on Wednesday 2 June by the European Commission and relating to budgetary policies in the countries of the Union are all sweetened by the economic shock caused by the viral pandemic. The EU executive confirmed that the Stability Pact will also remain suspended in 2022. It remains that Italy, a country marked by a now very high debt, strongly suggests to pursue “a prudent budget policy”.
«We have decided – said the vice president Valdis Dombrovskis – to extend the safeguard clause in 2022, with the aim of deactivating it in 2023. We are encouraging Member States to maintain support measures this year and next (…) A mix of spending – focused on investments by keeping other expenses – will facilitate the return to more prudent positions in the medium term, which will be particularly important for countries with high debt ».
Loading…
Look at high-debt countries, primarily Italy
The gaze turns to Italy, whose debt stock is now close to 160% of the gross domestic product. Like all other governments, the Italian one was forced to increase public spending to support the economy. It will therefore come as no surprise, also in light of the suspension of the Stability Pact, that 13 Member States did not comply with the debt rule in 2020. Among these, in addition to Italy, also Germany, France and Spain.
“The European Commission believes that, at this stage, it is not necessary to decide whether to submit the Member States to the excessive debt procedure”, reads the Community documentation. Even in terms of macroeconomic imbalances, the very serious recession of recent months has, so to speak, frozen the pre-pandemic situation. There are 12 countries at fault, of which three – Italy, Greece and Cyprus – who are dealing with an excessive imbalance.
Stability Pact under review
Returning to the Stability Pact, Brussels should present suggestions for its modification by the end of the year, as had been decided shortly before the outbreak of the pandemic at the end of 2019. The debate will be complicated by the upcoming elections in Germany and France. . In the meantime, the Commission suggests that as of next year, fiscal policies differ between countries, taking into account the economic and health situation of each.