Brussels is preparing the way for the 27 to start adjusting their budgets, which have been stretched by record spending since the pandemic, thanks to the activation of the escape clause that allowed the debt (60%) to be suspended under the Stability and Growth Pact, which sets ceilings. GDP) and deficit (3% of GDP) and a very strict compliance path. But this financial relief will end next year and so the EU government will propose to member states to start adjusting the 2024 budget so that the deviation is smaller and the maximum 3% deficit is met in the “medium term”. . “.
This is the conclusion of the budgetary instructions, which the European Commission presented this Wednesday in order to prepare the budget projects. “Member States are invited to set fiscal targets in their stability and convergence programs that meet the fiscal adjustment criteria set out in the Commission’s reform guidelines,” explains the Community government. There is still no agreement on fiscal rules beyond the proposal presented in November, which maintains the 3% deficit and 60% debt targets, albeit with more flexibility to achieve them.
What Brussels intends to do with its 2024 tax guidelines is to end the open bar it had on the 27th since the outbreak of the coronavirus, but stipulates that the suspension of tax rules is still in place. The idea is that the stability plans that European governments have to present in April will lead to deficit reduction.
Brussels will individually analyze the plans of the countries and make specific recommendations for each of them regarding the reduction of the debt, which in some cases, for example in Spain, is increasing. The implication of the warning that budgets will begin to tighten after three years of virtually unlimited expansion is that countries are at risk of default next year. That won’t happen in 2023 because the rules are suspended, but it will happen in 2024, the commission warns.
Brussels signals the end of energy measures
While it has never been used to punish any country for deficit deviations – despite the threat that hit Spain and Portugal in 2015 – the intention of the revised fiscal rules is to give each more flexibility. while establishing a more acceptable system of sanctions among member states.
One of the specific recommendations that the Commission will include in its analysis of the 27’s stability plans concerns the cost of measures to increase energy prices. Brussels has long warned that these initiatives should be as focused as possible. Thus, the commission indicates that if prices continue at current standards, “state energy support measures should be phased out by 2024 and the accumulated savings should help reduce the government’s deficit.” “If energy prices continue to rise and support cannot be completely stopped, concrete measures must be taken to protect vulnerable families and businesses,” the community government adds.
Source: El Diario
