France wants to abolish one of the most important rules of the European Union: that of a sound financial household booklet. As far as Paris is concerned, the public debt standards and the budget deficit are concerned, says Le Monde daily.
France would like to come forward with concrete proposals in the first half of 2022, when it is President of the EU, writes the newspaper. That is exactly the period of the election campaign in France.
Le Monde relies, among other things, on a study published by the Conseil d‘Analyse Économique (CAE), one of the government’s most important advisory bodies. It openly advocates the abolition of current financial rules in the EU.
In the EU, it has been agreed for almost 30 years that public debt should not exceed 60% of gross national product. The budget deficit must not exceed 3%. The Netherlands has always insisted that these rules should be enforced.
But according to the CAE, the rules are outdated. “Budgetary agreements are hardly suited to the current macroeconomic conditions,” write the authors of the report, three leading French economists.
The economies of EU countries are nothing more like those of 30 years ago, when the Maastricht Treaty was signed, which contained the budgetary commitments, according to the report. For example, interest rates have fallen dramatically, or even negatively, and last year the EU decided to borrow money itself to support Member States.
Also, the differences between countries have widened, according to the economists. For example, Italian public debt is three times higher than that of Sweden. “Budget agreements must take account of these differences,” says the CAE.
‘Let standards vary by country’
Because of corona, the current European budget rules have already been ‘suspended’. Countries are allowed to make more debts to help their economies regain. But that is a temporary measure.
France now wants to get rid of the rules definitively. The maximum budget deficit of 3% can be abolished entirely according to the CAE. “There is no analytical justification for this,” says the advisory body. The 60% standard for public debt must change to national standards. This debt and its growth will then be controlled by an independent national institute and the EU.
EU Presidency during election campaign
Paris will assume the rotating Presidency of the EU in 2022. During this period, President Macron wants to put new budgetary rules on the European agenda, writes Le Monde.
That is precisely the period when an election campaign is being held in France. Presidential elections will be held in May 2022. It is expected that Emmanuel Macron will participate in this.
The ‘tinkering’ with the budget rules of Brussels could potentially bring him electoral profits. The French are very critical of the EU and also of the ‘strict’ financial rules that Brussels has to comply with.