While Germany and Northern Europe remain attached to budgetary orthodoxy, the community executive recommends to the most indebted European countries to start reducing their debt. In particular, she advises France to reform her pensions system.
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Will we return, one day, to the budgetary rules which are supposed to supervise the finances of the countries of the euro zone? The crisis linked to the pandemic of Covid-19 has shattered them, bringing the commission to suspend, in March 2020, the stability and growth pact, which requires Europeans to limit their deficit and their public debt to, respectively , 3 % and 60 % of the gross domestic product (GDP). This exceptional state, which was already extended once in March 2021, was to last until the end of 2022. Monday, May 23, the community executive still delayed, one year, the deadline.
The invasion of Ukraine by Russia put a brutal brake on the resumption that the old continent knew after the pandemic. On May 16, the Commission revised its forecasts downwards. It now bets on an increase in gross domestic product (GDP) of 2.7 % in 2022 within the European Union (EU) when, in February, it anticipated growth of 4 % in 2022. But ” Three -quarters of this growth are explained by the growth acquired in 2021, “said Paolo Gentiloni, the economy commissioner, who does not exclude a darker scenario and judges” possible “the return to” growth negative “.
” Not a white check “
Inflation perspectives are not better. The Commission is counting on an increase in prices of 6.8 % within the EU in 2022. The war caused a new outbreak of energy prices, put under tension the agrifood markets and increased the supply of supply for industry. What is more, the confinements that multiply in China in the face of the resurgence of the pandemic accentuate tensions on value chains and also weigh on prices.
In this context, Europeans want at all costs to avoid the scenario that followed the 2008 financial crisis, when they tightened the budget of the budget too early and killed the recovery in the egg. The pandemic saw the debt of the twenty -seven -on average, it represented at the end of 2021 almost 90 % of GDP -and dug the gaps between countries. Thus, this ratio reaches almost 200 % for Greece, 150 % for Italy, 110 % for France and 70 % for Germany. Consequently, the return to the criteria of Maastricht seems out of reach, which the decision of the commission on Monday.
“It is not a white check”, however warned Paolo Gentiloni, who knows how divided Europe remains on budgetary subjects. The Commission also recommends that the least indebted countries favor investments to draw the European economy, while the most indebtedness attack a reduction in their debt. In particular, it asks France to reduce its public spending and to initiate pension reform. “The suspension of the stability pact does not mean that all countries can do as they see fit,”, for its part, warned the vice-president of the commission, Valdis Dombrovskis, who was reluctant to suspend a year of plus the stability pact.
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