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"It’s the politics, stupid” - don't squander this golden opportunity for reforming the fiscal rules

  • On the reform of fiscal rules, the EU risks letting a once-in-a-decade opportunity slip. The time window for a successful reform is tight. And the Commission's current proposal is economically sound but politically overconfident. This risks drawing the Commission into political fights it cannot win, and would repeat some of the mistakes of the last reform process. At the same, current rules remain impossible to apply. Those who romanticize the old framework therefore need to realize that a retreat to the old system is not an option. The EU thus needs a compromise and needs it fast. To get there in the little time left, we propose four improvements: first, the system needs some numerical benchmarks for debt reduction in the adjustment period; second, it should include a clear definition of the scope of possible deviations through growth-oriented reforms and investments; third it should come with explicit carve-outs for national expenditures linked to some EU programs; and fourth, it needs credible enforcement through better ownership not only at the national but also at the European level.

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Metadaten
Document Type:Working Paper
Language:English
Author(s):Johannes Lindner, Nils Redeker
Publication year:2023
Publishing Institution:Hertie School
Number pages:10
Related URL:https://www.delorscentre.eu/en/publications/fiscal-rules-reform
Release Date:2023/03/28
Hertie School Research:Jacques Delors Centre
Jacques Delors Centre / Policy Briefs
Licence of document (German):Metadaten / metadata
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