The acting first vice president of the Government of Spain, Nadia Calviño, had it as the first point of the day to be discussed together with the ministers of Economy and Finance of the EU (Ecofin) in today’s meeting. He wanted to accelerate the agreement on the new fiscal rules and this has been unanimously agreed by the ministers and governors of European central banks meeting in Santaigo de Compostela this Saturday, assuring that negotiations will intensify during the coming weeks in order to reach an agreement at the end of year, during the Spanish Presidency. The new fiscal rules must come into force in January 2024. Thus, the negotiation to reform the fiscal discipline rules that limit the debt and deficit of EU countries enters its decisive phase this autumn.
The ministers of Economy and Finance of the EU (Ecofin) agreed this Saturday “unanimously” to intensify the negotiations in the coming weeks in order to be able to agree before the end of the year, during the Spanish Presidency, on the new fiscal rules, which must come into force . in January 2024. This was stated by the acting first vice president of the Government, Nadia Calviño, after the meeting of the ministers and governors of European central banks held in Santiago de Compostela.
The Minister of Economic Affairs valued the “unanimous” agreement revealed in the Ecofin to “intensify the work with an ambitious calendar”, in order to negotiate the thorny part of the new European fiscal framework, the “politics”, once it has already been agreed. 70% of the articles in its “technical” part.
Calviño said that the agreement must go through the embodiment in the new European fiscal umbrella of a “double balance” that the ministers see as necessary: on the one hand, maintaining a continued path of reduction of the debt-to-GDP ratio that guarantees sustainability while ensuring investments and incentives; and on the other hand, respect the specificities of the countries in line with the guarantee of common rules that protect equal treatment between States.
The number two of the acting Government determined the meetings held this week in the Galician capital as a “success”, both the one held between the EU and Latin American countries and this Saturday’s Ecofin meeting.
Calendar for the new tax rules to arrive
The two next meetings of the ministers in Luxembourg and Brussels (October 17 and November 9) are gaining relevance, although European sources do not rule out more meetings in other formats, in groups or by videoconference, to accelerate the negotiations.
If the finance ministers manage to close an agreement between themselves, negotiations with the European Parliament will be unblocked, which plans to set its red lines throughout this autumn.
Both institutions will have to agree after the final texts of the reform and the goal is to achieve it before the European legislature expires in June 2024 so that they can be applied in the 2025 national budgets.
In spring, the Twenty-Seven agreed on the essential characteristics of the reform, based on the establishment of national fiscal adjustment paths agreed between each country and Brussels, as well as on the establishment of primary spending as an essential indicator of public accounts, to the detriment of the structural deficit. . of the current regulations.
These paths will have a horizon of four years, although countries may extend them to seven years if they commit to reforms and investments in line with EU priorities.
How are the negotiations for the fiscal pact?
The first is the primary objective for Germany, which calls for ensuring debt reduction with fixed reduction targets for all States (up to 1% per year for the most indebted), while France rejects any automatic reduction and emphasizes leave room for investments in defense or the environment.
Germany has the support, to a greater or lesser extent, of a dozen countries (Czech Republic, Austria, Bulgaria, Denmark, Croatia, Slovenia, Lithuania, Latvia, Estonia and Luxembourg) that see fiscal stability as a priority, while France aligns itself Italy and eastern countries that want greater scope for defense investments in the wake of the Ukrainian war.
Despite the blocs, the dynamics of the negotiations are far from the tough discussions between the North and the South that marked the financial crisis of the last decade, point out European sources, who highlight that some of the biggest defenders of austerity in the past They have qualified their position after the pandemic and war have forced them into debt.
Spain, which leads the negotiations as the rotating presidency of the EU, also has the support of Denmark and the Netherlands, which have presented proposals that seek to “build bridges” and help “get out of the France-Germany dilemma,” explain other sources. .
Research in China
Furthermore, at the press conference with Calviño, the European Commissioner for Trade, Valdis Dombrovskis, praised the “ambition” of the Spanish Presidency to make the new fiscal rules a reality before the end of the year. “It is a challenge, but the Spanish Presidency is very committed to achieving what someone has called the ‘Santiago Fiscal Path,’ the commissioner joked. At the press conference, the European Trade Manager and the First Vice President were asked about the investigation that the Commission has announced into China’s aid to electric vehicles.
Dombrovskis stated that this investigation will be opened because it is an issue of “strategic importance” for Europe, in view of the ban on vehicle sales that the EU has decreed for the next decade. For this reason, he stated that in all likelihood he will speak personally with the Chinese Government and the sector in an upcoming visit that he will make to that country.
Calviño stated in this regard that in a geopolitical and technological context like the current one, “we must ensure a situation of equality for all, and protect the competitiveness of the EU while maintaining it as an open actor” in the commercial scenario. world
EIB Presidency
The reform of the so-called Stability and Growth Pact, the rules that the EU adopted in the 1990s to guarantee the fiscal sustainability of the member states, was the focus of the ministerial meeting, in which the future presidency of the European Investment Bank ( EIB) barely used a few minutes of explanation by the Belgian minister promoting the process.
On the margins of the meeting there have been meetings between the national delegations and the candidates present, among them, the former European commissioner Margrethe Vestager, but without progress in the election, which Calviño is opting for.
