Free Trial

MNI INTERVIEW: EP Takes Aim At "Stricter" EU Fiscal Rules

(MNI) Brussels

The European Parliament will try to water down proposals for member states to limit fiscal deficits to 1.5% of gross domestic product over the medium term, the legislature’s representative in “trilogue” talks on the bloc’s new fiscal rules with the European Commission and the European Union’s Belgian presidency told MNI.

The proposed reform of the EU’s Stability and Growth Pact agreed on Dec 20 toughens up the current requirement for national deficits to be no more than 3% of GDP, a level which remains the trigger for the excessive deficit but would be limited to exceptional times of crisis or recession, noted Socialist Group MEP Margarida Marques.

“We don’t understand why we need new elements that are more strict than the existing EU treaty,” Marques told MNI.

The so-called deficit resilience safeguard was inserted into the reform at the insistence of Germany, after long and difficult talks which had started out with the objective of making the bloc’s rules on borrowing more realistic and easier to enforce.

The European Parliament voted on Wednesday to adopt a negotiating mandate excluding the safeguard, drafted by the centre-right EPP and the S&D Socialist Group, by a majority of 431 to 172. (See MNI: European Parliament To Seek To Dilute Fiscal Rules)


But Marques says the deficit safeguard will not be the only point of tension between the states and the parliament, which will also push for more for leeway for governments to borrow to fund investment. (See MNI: EU's Likely New Fiscal Deal Sounds Tough, Details Lacking)

“It is not credible to say that we want to do the green and digital transitions and yet finally we don’t give to member states enough space for investment to promote them. And of course we have a new challenge – defence - so it means that all of these political goals must be on the table,” she said.

“We don’t have at European level enough support to promote these political priorities and political ambitions.”

Despite big differences between the participants in the talks, she said that reaching an agreement was a matter of urgency and that she does not want to see a return to the old rules. The parliament is “very committed” to getting a “landing zone” by mid-February as urged by the Belgian EU presidency, she said.

MNI Brussels Bureau |
MNI Brussels Bureau |

To read the full story



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.