Report
How to reform euro area fiscal rules?
European fiscal rule s, as enshrined in the Stability and Growth Pact, are currently suspended to allow government s to fight the economic fallout from the pandemic . U nder current plans , these fiscal rules will be enacted again in 2023. The crisis, however, has triggered a debate about a reform of the fiscal rules and the European Commission already started in early 2020 a review process of the EU economic governance process. The discussion s are likely to be complicated and we don’t expect any radical change of the current framework. That said, g overnments cannot ignore the fact that the speed of debt reduction foreseen under the current rules – once the escape clause of the SGP ends – is unrealistic . A likely compromise emerging from this debate will allow the European Commission more flexibility in interpreting the current rules, implying a less aggressive reduction in debt than foreseen under a strict interpretation of the rules.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Dirk Schumacher
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