Source: AFP
EU states and lawmakers will hold final wide-ranging talks on Friday to try to reach an agreement on budget reforms aimed at boosting investment while keeping spending under control.
The European Union has spent two years in an intensive effort to roll out reforms supported by leaner member states such as Germany and other countries such as France and Italy that are seeking more flexibility.
After much wrangling between Berlin and Paris, the 27 member states reached an agreement in December and then began talks with negotiators from the European Parliament.
The reforms will be formally adopted after an agreement between lawmakers and states.
The current rules are known as the Stability and Growth Pact and limit countries’ debt to 60% of gross domestic product and public deficits to 3%.
They have, however, been suspended by the coronavirus pandemic to give member states room to spend more at a time of great economic turmoil.
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During the initial discussions between the countries, the battle was fierce over how much these old limits should be relaxed to make more room for investment.
With war raging in Europe and the EU making a green transition, states led by France argued for more room to fund these key sectors, including, for example, the supply of critical weapons to Ukraine.
Hello big spender
The text proposes looser fiscal rules that are more tailored to each state’s unique situation, allowing big spenders a slower path back to austerity.
The adjusted approach would mean that each country presents its own adjustment trajectory over a period of at least four years to ensure its debt sustainability.
For those undertaking reforms and greater investment, this adjustment period can be extended to seven years, allowing for a less painful return to fiscal health.
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![](https://images.yen.com.gh/images/b5a56fb0b9fe759e.jpg?impolicy=cropped-image&imwidth=256)
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Negotiations between parliament and member states are just as intense, with two days of meetings already this week.
An EU diplomat said the talks were “progressing positively and constructively”.
Despite the common understanding of the need to reach an agreement, discussions continue.
Another EU diplomat said parliament was pushing for more room for investment, but added it was “not going to fly” with EU countries.
“Some member states believe that the new system as a whole already provides much more room for investment than the old rules, so adding even more flexibility would undermine the fragile balance in the text,” he told AFP.
“It will be a nail,” added the diplomat.
Source: AFP