Reforming EU debt rules is controversial but essential.
(Photo: dpa)
Berlin Even in a state of emergency you can settle in comfortably: the EU debt rules have been suspended for four years now. First, because of the corona pandemic, European countries approved more loans than the Maastricht limits actually allow. Then followed Russia’s war of aggression against Ukraine and the turmoil on the energy markets, which is why the requirements will remain suspended in 2023.
At the beginning of 2024, the debt rules will now come into force again. A majority for a renewed suspension is not in sight – and that’s a good thing. There’s no reason for it either. As of now, the feared recession in Europe has not materialised. The EU Commission has just raised its growth forecasts.
As right as it was to suspend fiscal rules in an economic emergency, it is necessary to return to normal. This applies to the German debt brake as well as to the Maastricht criteria in Europe. Politicians will have to get used to not solving every problem with new debts.
Such weaning is necessary, but not easy. After the past crises, debt levels in many countries are at record levels. This raises the question of whether the old rules fit these new framework conditions. From a realistic perspective, the answer is: only to a limited extent. The necessary austerity course would not be politically feasible and would not make economic sense.
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That is why the EU debt rules need to be reformed before they come back into force. Because unrealistic specifications, to which no one would seriously feel bound anyway, would not bring any gain in stability. So moderate reform is needed. This means that the targets – three percent of economic output for the deficit and 60 percent for the debt level – should remain in place. Opponents argue that the limits are arbitrary. That’s true, but it also applies to every possible new value. But the decisive factor is that anyone who raises the values once creates a precedent. The demand for the next softening would not be long in coming, and the limits would then be adjusted to the debt levels and not vice versa.
The targets are therefore not up for negotiation, but are even reconfirmed by the reform. In return, however, there is a greater sense of reality when it comes to the requirements for how quickly they can be complied with again. If such an agreement succeeds, it could, at best, make the European debt rules more binding again.
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