EU lawmakers approve overhaul of budget rules

European Union lawmakers on Tuesday approved a reform of the bloc's budgetary rules aimed at reigning in spending.

Brussels has spent two years negotiating the reform.

The new rules still need to be endorsed by the bloc's 27 member states. Member state negotiators gave provisional approval in February after talks with lawmakers.

What is the EU's budgetary reform?

The new rules stipulate that a state's debt must not go beyond 60% of GDP and its public deficit must stay below 3%.

Countries with debt at over 90% of GDP will be required to reduce it by 1% per year on average and by 0.5% when it is between 60 and 90%.

The new rules would make it more difficult for the EU Commission to launch procedures against countries with excessive deficits if essential investments are ongoing. National expenditure on the co-financing of EU-funded programs will be excluded from spending calculations.

The reform also allows member states with excessive deficits or debt to request a discussion process with the Commission.

Previous budgetary regulations under the Stability and Growth Pact were suspended between 2020 and 2023 to help EU member states deal with the economic consequences of the COVID-19 pandemic and Russia's war in Ukraine.

Negotiations on the new budgetary rules saw fierce debate on how much limits should be relaxed to give more room for investment.

Economy comissioner hails 'flexible' rules

The EU's economy commissioner, Paolo Gentiloni, said that the new rules are "more flexible, more growth oriented, more credible in their implementation."

He said that the reform was a "good compromise."

The regulations were supported by the three largest groups in the European Parliament, the conservative European People's Party (EPP), the center-left S&D alliance and the centrist Renew group.

EPP lawmaker Markus Ferber said: "This reform constitutes a fresh start and a return to fiscal responsibility. The new framework will be simpler, more predictable and more pragmatic."

"However, the new rules can only become a success if properly implemented by the Commission," he warned.

Meanwhile, Margarida Marques of the S&D praised the reform as providing "more room for investment" and "flexibility," while ensuring a "'real' social dimension."

Left-wing groups have criticized the rules, arguing they are a tool to implement austerity.

Philippe Lamberts, chairman of the Greens-European Free Alliance, called the reform a "straitjacket that will confiscate all the indispensable fiscal means to guarantee a climate, social and economic future in Europe."

sdi/lo (AFP)