MNI: EU Nears Fiscal Rules Deal In Trilogue Talks - Sources

Three-way institutional talks to finalise new European Union fiscal rules are nearing a deal this week which would see more flexibility for borrowing to finance investment and possibly measures to protect disadvantaged members of society, officials close to the talks told MNI.

Representatives of the European parliament are insisting on easier treatment for investment as the price for accepting tougher rules limiting budget deficits to 1.5% of GDP over the medium term which were agreed by member states Dec 20. Negotiators

In the Trilogue talks which also include the European Commission have reserved all of Friday to clinch a deal, which would then allow parliament to approve the reform of the Stability and Growth Pact which would come into force next year, officials said.

The investment demands are deal breakers for Socialist parliamentarians, sources said, while the parliament’s Employment Committee has said it will not support any reform without concessions on the social dimension. While a meeting to discuss investment on Tuesday left many MEPs irate at the EU presidency’s refusal to countenance concessions, discussions on the social dimension on Wednesday were more constructive, they said. (See MNI INTERVIEW: EP Takes Aim At "Stricter" EU Fiscal Rules)

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MEPs also seek a bigger role for independent fiscal watchdogs at national level and for the European Fiscal Board, measures resisted by the Commission to date though supported by Germany in the past. In addition, parliamentarians demand more dialogue with governments before the Commission issues guidance on medium-term deficit and draft trajectories.

The parliamentarians argue that this will restore some of the emphasis on tailoring fiscal adjustment plans to countries’ specific needs that was included in the Commission’s original proposals for reforming the fiscal rules but which fell by the wayside as Germany pushed for the so-called Resilience Safeguard to limit deficits to 1.5% of GDP.

Allowing additional room for borrowing for investment would help the EU finance its digital and green transitions, while also paying more for defence, one parliamentary source said. The burdens of austerity should not fall disproportionately on the most disadvantaged, the source added.

“We want clear references that medium-term plans of states must incorporate a dimension which takes account of the need for social convergence,” the source said.