eThe good news is that EU Economic Commissioner Pavlo Gentiloni was with him when he went down to the lecturer in the EU press room. “Europe’s economy is expected to grow strongly this year and next,” the Italian said in a spring forecast of his power. For the first time since the outbreak of the corona epidemic, economists are very positive.
In fact, the EU economy is expected to grow at a strong 4.2 and 4.4 percent this year, and all of the EU’s economies will return to pre-crisis levels by the end of next year. With the support of billions from the EU Reconstruction Fund, companies and states are investing more than they did over the past ten years, and thanks to Corona’s assistance to companies and short-term programs, the worst effects of the staff crisis have been averted: unemployment will be at pre-crisis levels in many countries in the coming year – in some cases even lower Will be.
However, this dramatic recession has come at a price: aid to workers and companies has saved the continent from bankruptcy, mass unemployment and the banking crisis. However, billions spent on the budgets of EU member states led to sharp red numbers and a sharp rise in national debt.
Last year, the average debt in the euro zone was 100 percent of economic output; The Commission’s forecasters have calculated. This year, the average debt is expected to rise to 102.4 percent.
Only one member of the eurozone complies with the terms of the Sustainability and Development Agreement – currently suspended. Only rich Luxembourg should make it this year, new debt To make it equal to a maximum of three per cent of economic output and to keep the national debt burden below the maximum limit of economic output of 60 per cent. The principal’s new debt is 0.3 percent and the debt burden is just 27 percent.
In perspective, there is a gap between the strict Maastricht criteria and the reality of deep red government funding. In the coming year, despite the reduction of corona aid, only one elite club from eight euro countries will have to comply with the new loan limit of a maximum of three percent of economic output. It should be Ireland, Cyprus, Latvia, Luxembourg, the Netherlands, Austria and Finland, with the exception of Germany, which could generate 2.5 per cent of new debt in economic output in the coming year.
In the coming year, only seven countries will meet the target of total debt not exceeding 60 percent of economic output: Estonia, Ireland, Latvia, Lithuania, Luxembourg, the Netherlands and Slovakia. Three of the 19 euro countries, namely Luxembourg, Latvia and the Netherlands, will meet the credit criteria.
Another figure illustrates how little public finance is related to post-Corona Maastricht criteria: although only seven countries follow the target for total debt, seven countries have grown to more than 100 percent of total debt production.
In Belgium it should be 155.5 per cent next year, 116.4 per cent in France, 106.6 per cent in Cyprus and 122.3 per cent in Portugal, which is twice the Maastricht criteria. Italy, with a debt burden of 156.6 percent, and Greece, which will reach 208.8 percent this year, are already operating in a parallel financial world.
In view of this development, it is not surprising that no one expected the Maastricht Criteria, which had been suspended since last spring due to the epidemic, to be re-enacted as before. EU Vice President Valdis Dombrovsky, who is in charge of economic affairs, has been planning to reform credit rules for some years, as these terms have become increasingly confusing in recent years. The manual for explaining only the so-called rules is now about 100 pages long.
However, the billions in aid needed for the corona epidemic have ensured that this planned simplification and streamlining will lead to a more fundamental correction. Voices calling for more generous rules are growing in Italy and France, and calls for them are coming from the European Parliament: Rosmas Andres Greens, who sits on the budget committee, “should not return to the previous European financial rules.”
EU Budget Commissioner Johannes Hahn descended on Weld: he argues that in the future individual countries should use personal, realistic avenues to reduce debt. It is inappropriate to allow Greece to violate the 60 percent credit rule. This position is unexpected, after all, Han comes from financially conservative Austria.
The Commissioner received the support of Klaus Wreckling, Managing Director of the Euro Rescue Fund ESM, A company considered the epitome of drastic adjustment plans in southern Europe. “We need to think about the debt ceiling,” Wreckling said at an event.
“The 60 percent credit target was meaningful when the Maastricht deal was negotiated, but now it doesn’t make sense.” If the average debt is 100 percent, it is economically unreasonable for countries to demand an increase in their debt each year. 1/20. This is what the current applicable rules provide. In addition, very low interest rates ensured that states could repay more debt.
This is a dangerous argument for Marcus Ferber (CSU), who represents the Christian Democratic EPP group in the European Parliament’s Economic Council: “Given the current low interest rate situation, the EU may regret making fundamental structural decisions for a few years,” Ferber says. “Interest rates may rise again, and then the massive national debt of some member states will become a time bomb.”
The debate over the future of credit rules should really take off after the summer, as the commission will present plans to reform the rules later this year. Until then, it should be clear how long the applicable rules will be in effect.
Based on the current economic forecast, Gentiloni said on Wednesday that they will be in effect until the end of 2022. How it goes after that depends on how the economic situation develops.
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