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MNI POLICY: EU Likely To Ease Debt Reduction Rules

The European Commission is coming under pressure as it prepares to implement tougher new fiscal rules.

The European Commission is likely to be forced to reconsider its stance that states facing excessive deficit procedures like France and Italy must reduce borrowing to a point where debt is on a plausibly declining path by 2032, MNI understands.

Upon the introduction of new fiscal rules earlier this year, the Commission had insisted that any divergence between EDPs, its traditional corrective arm, and the incoming arrangements would err in favour of the tougher requirement. But finance ministers from states involved are set in the next few weeks to make what could be a successful push to stick with the less ambitious adjustment required under the EDPs, which call for a 0.5% of GDP annual adjustment.

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The European Commission is likely to be forced to reconsider its stance that states facing excessive deficit procedures like France and Italy must reduce borrowing to a point where debt is on a plausibly declining path by 2032, MNI understands.

Upon the introduction of new fiscal rules earlier this year, the Commission had insisted that any divergence between EDPs, its traditional corrective arm, and the incoming arrangements would err in favour of the tougher requirement. But finance ministers from states involved are set in the next few weeks to make what could be a successful push to stick with the less ambitious adjustment required under the EDPs, which call for a 0.5% of GDP annual adjustment.

Keep reading...Show less