BRUSSELS (Reuters) – The European Commission proposed on Wednesday to vary the EU’s fiscal rules in order that governments would negotiate individual debt reduction paths of a length linked to reforms and investments, but the concept is already facing scepticism, notably from Germany.
The change, which moves away from the present one-size-fits-all obligation of annual debt cuts of 1/twentieth of the surplus above 60% of GDP, is supposed to make governments “own” their debt plans, relatively than see them as externally imposed by the EU.
However the proposal has already raised concern in EU capitals, notably in Berlin, that longer and individually negotiated debt reduction paths would mean governments will postpone difficult decisions towards the top of the allotted time, often until after their mandate expires.
Still, the changes are mandatory because, after the surge in public debt in European Union countries brought on by the COVID-19 pandemic, existing debt reduction requirements have change into unrealistically ambitious.
(Reporting by Jan Strupczewski)
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