Austria, Denmark, Latvia, Slovakia, the Czech Republic, Finland, the Netherlands and Sweden have crushed the EU’s dreams of loosening the bloc’s deficit rules. Ahead of an informal gathering of their peers in Slovenia this Saturday, the countries issued a document to the bloc.
A one-page document signed by their finance ministers read: “Reducing excessive debt ratios has to remain a common goal.
“The [EU] Treaty … obliges all Member States to avoid and correct excessive deficits.”
This is set to be a major blow for France, Italy and Spain who have all said the rules should be adapted to post-pandemic realities and climate change.
Under the EU’s Stability and Growth Pact (SGP), it caps budget deficits at three percent of economic output.
It also limits public debt to 60 percent, according to Politico.
However, the framework has been widely critcised as it allows Brussels to bend the rules and avoid fining anyone from straying from the benchmarks.
Berlin has opposed easing the rules but following the Chancellor elections this month, there could be a shift in economic policies.
The Austrian-led anti-debt club has said it is open to change but not the kind Paris, Rome and Madrid are hoping for.
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“Discussions on improving the current economic government framework need ample time and should be based on broad consultations by the Commission.
“Quality is more important than speed.”
The EU Covid recovery fund was met with anger as the bloc wants to link the behaviour of member states with access to the funds by means of a “rule of law” mechanism.
This means any country which pursues policies which the EU feels do not uphold its core values will lose access to the vital funds.
Back in November, Hungary and Poland blocked the EU budget over the rule of law issue.
Hungarian Prime Minister Viktor Orban said his country’s position on the budget and recovery fund is “rock-solid” and will not seek a compromise on the rule of law issue.
He said: “Our position is rock-solid, theirs is only a political will.
“Theirs can be changed, ours cannot. I do not want a compromise.
“Whoever links them is irresponsible, because the crisis needs fast economic decisions.”
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