Public accounts, EU: there will be no return to austerity logic

Prudence and investments. These are the recommendations of Brussels in presenting the guidelines of the new Community rules on state budgets. Rules that will be more flexible than in the past but that do not authorize uncontrolled spending. In this sense, the invitation to gradually reduce public aid against high energy costs and the possibility of reopening procedures for excessive deficits from next year

A clear message comes from Brussels: prudence on public finances, because from next year Europe’s eye will once again focus on the budgets of each country. Since the beginning of the pandemic, the rules imposing limits on spending (the Stability and Growth Pact) have been frozen, in order to allow states to face the crisis caused by the health emergency.

Stability Pact unfrozen

A suspension which, despite the uncertainty mainly due to inflation, will end in 2023. From the spring of next year, those who adopt cheerful fiscal policies will be able to end up under the Community procedure. With an important difference compared to the past.

Take advantage of European funds

“There is no possibility of returning to the old logic of austerity”, specifies the European Commissioner for the Economy Paolo Gentiloni. “The message is how to manage to keep prudence, the gradual reduction of debt and the fight against inflation together, but at the same time the mountain of investments”.

More flexibility for those who exceed

While the pillars of the Stability Pact remain unchanged (deficit-GDP no more than 3% and debt-GDP within 60%), more flexible rules are being developed which will allow each country to make more gradual adjustments, to be agreed with Brussels. In practice, there will be specific paths, an aspect that closely concerns those who, like Italy, have a very high debt.

Gradually reduce aid for bills

While waiting for the new rules, Europe dictates a series of recommendations: exploit EU funds (including, of course, those of the Pnrr) to stimulate growth and keep spending under control, starting with aid to cool down energy costs . Given the reduction in prices – explained Gentiloni – these supports should be gradually eliminated. Another clear message, which also concerns Italy, where the measures for household and business bills expire at the end of March.