Free Trial

MNI BRIEF: ESM Paper Proposes 100% Debt/GDP Benchmark

(MNI) LONDON
(MNI) Brussels

A new European Stability Mechanism staff discussion paper propose a new 100% of GDP government debt reference limit to replace the 60% in the current Stability and Growth Pact. The paper's authors also proposes an expenditure rule that would track trend growth, saying that along with a 3% deficit limit and a primary balance rule, this would allow for countries with debt over 100% of GDP to reduce the gap by 1/20th a year.

"Post-pandemic fiscal rules should provide credible policy guidance. Well-designed and transparent rules can boost fiscal performance and prevent policy missteps. In the medium term, revised rules can help phase out pandemic-related discretionary fiscal measures. In the long-term, they can strengthen commitment to fiscal positions stabilising public debt levels."

The paper follows last week's EU Commission relaunch of the consultation on EU economic governance.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
True
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
True

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.