Gentiloni: «Gradual reduction of public debt by promoting the protection of public investments, more necessary than ever to finance green and digital transitions»
[24 Aprile 2024]
The European Parliament yesterday definitively approved the reform of the Stability Pact, updating the parameters that have guided decades of austerity in Europe since the 1990s, suspended during the pandemic. The new rules ensure Member States greater margins of flexibility, but will inevitably end up impacting the public investments necessary (also) for the ecological transition.
“We have on the one hand the prospect of reducing the debt and deficit accumulated due to the black swans” of the Covid-19 pandemic and the Russian invasion, explained the European Commissioner for Economic Affairs – Paolo Gentiloni – in the statements collected from the microphones of TotalEu productionthe European video news agency with which greenreport.it has started an editorial collaboration.
«We must strengthen growth through the recovery of purchasing power, the decline in inflation and the maintenance of public investments», added Gentiloni, speaking to the MEPs gathered for the last plenary session of the legislature: «The adoption of the reform will allow the presentation of the first cycle of medium-term fiscal-structural plans already this year, resulting in a gradual reduction of public debt without compromising growth by promoting the protection of public investments, more necessary than ever to finance green and digital transitions” .
In fact, however, the Maastricht parameters remain in place: member states will have to limit public debt to within 60% of GDP, and the ratio between deficit and GDP to within 3%.
Countries with excessive debt – such as Italy – will be required to reduce it by an average of 1% per year if their debt is above 90% of GDP, and by 0.5% per year on average if it is between 60% and 90%. As regards the deficit, if a country’s deficit is higher than 3% of GDP, it should be reduced during periods of growth to reach 1.5% and create a spending reserve for periods of difficult economic conditions.
Member States will have to present their first national plans by 20 September 2024, and then negotiate debt reduction with Brussels over a four- or seven-year horizon; according to the first estimates filtered on the subject, for Italy it could mean cuts of between 8 and 15 billion euros a year in public spending.
«Our request to the Member States is to present the intermediate plan by 20 September – confirms Gentiloni a TotalEu – Of course, we all know that this is a first time and therefore there will be a certain degree of flexibility. The decision to start implementing the new rules in 2025 was taken and widely shared by Member States. It was therefore not a decision imposed by the Commission on the Member States. And if we want to start implementing the new rules next year, we need to have the medium-term plans this autumn.”
From the European Parliament they assure that the new rules of the Stability Pact will support a government’s ability to invest, and that it will be more difficult for the Commission to subject a Member State to an excessive deficit procedure if essential investments are underway. The plan expected for September will constitute a first, concrete basis for evaluating the actual concreteness of this orientation.
«Those with the highest deficit have a more complicated challenge. But having said that, with the existing rules the challenge would perhaps be very, very difficult to implement. With the new rules it will be more compatible”, assures Gentiloni.
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