The EU’s Commissioner for Economy and former Prime Minister of Italy, Paolo Gentiloni, has pleaded for the union to consider loosening its budgetary rules so that member states no longer be subject to the same strict regulations, given the different economic situations they face.
“We cannot put all the countries in one basket. The differences in public debt levels are too large,” he told Frankfurter Allgemeine Zeitung on Wednesday.
Italy’s debt-to-GDP ratio has reached 155%, while the Netherlands is at 57%. Belgium’s debt-to-GDP ratio currently stands at 112.7%. The member states with highest public debt worry that a return to the strict EU fiscal rules will harm economic recovery.
The European Commission is due to suggest a reform of the budgetary rules by mid-2022. Under the so-called Stability and Growth Pact set of rules, member states must follow policies that limit budget deficits below 3% and for total national debts to not exceed 60% of their GDP.
These rules were suspended until 2023 to allow member states support sectors hit hard during the pandemic, and stimulate their national economies.
Gentiloni said the EU rules will have to be “more credible and realistic”. “Let’s be honest, we have never succeeded in applying the debt criteria. The reform must therefore also include more effective instruments for the implementation and control of fiscal rules.”