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MNI DATA FORECASTS: EZ Inflation, US Payrolls In Focus
MNI: Sweden Tries To Push EU Fiscal Reform Back To Commission
EU finance ministers will try to sketch out the common ground which would cover any eventual agreement on reform of the bloc’s fiscal rules in talks in Brussels on Tuesday, with a view to shunting the contentious topic back to the European Commission to come up with more detailed proposals, EU officials told MNI.
Such a manoeuvre is being promoted by the bloc’s Swedish presidency as a way of allowing it to concentrate on other challenges such as the Ukraine war and Europe’s response to U.S. subsidies for green investment during its six-month term.
The Commission’s earlier proposals for reform of the Stability and Growth Pact, presented last November, were heavily criticised by so-called “frugal” countries like Germany and the Netherlands, who feared that granting more flexibility to high-debt countries to return to permitted levels under Brussels supervision would lead to rule-bending and transfer power to eurocrats from member states. (See MNI: EU Officials Doubt Gentiloni's Fiscal Rules "Consensus")
There is “quite a bit of agreement that we need to look at this from a medium-term perspective,” one EU official said. “It is also important to have both strong national ownership of the national processes of economic governance, but at same time a firm and strong set of common rules and a framework for these important issues.”
KICKING FISCAL CAN DOWN ROAD
While kicking the fiscal reform back to the Commission may have the effect of keeping talks on track ahead of next year, when the current rules, suspended firstly due to Covid and then due to the Ukraine war, are due to come back into force, the risk with this approach is that it will just delay resolution of the main and thornier points of difference until the Spanish presidency in the second half of this year.
But the first official said he would be “very surprised” if the Commission did not come forward with concrete proposals after the next meeting of the finance ministers in March 14 and the March 22 EU summit.
“We already know there are very much different opinions on these issues. What we hope from tomorrow’s discussions is to see where the possible landing zone is on this issue,” the EU official said. “There is a general understanding that it is important to combine fiscal adjustment with reforms and investments to address the various challenges of the public finances.”
The official said that the March ECOFIN meeting could “hopefully” produce a “summing up” of the talks so far, which would then allow the Commission to come forward with concrete proposals.
“How do you bridge differences? Normally what you do is that you raise the abstraction level somewhat. If you’re not agreeing on the details, then you try to find common ground a bit higher up on the scale to make it more general and that is what we may need to do at this point,” the official said.
“And then we need to see how we can put the ball back into the Commission’s court because we need concrete proposals.”
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