Spain and the Netherlands present proposal to amend European fiscal rules

by Lorraine Williamson
European fiscal rules

Spain and the Netherlands join forces on Monday 4 April at the Eurogroup meeting in Luxembourg to present a joint document to promote the review of fiscal rules within the European Union in 2022. 

The governments of Pedro Sánchez and Mark Rutte want to break through passivity within the EU. Furthermore, they hope this will give a boost to a constructive debate that should lead to a revision of European fiscal rules this year. Rules that are compatible with the economic growth of the euro countries. 

Budget rules are laid down in the European Stability and Growth Pact 

The Stability and Growth Pact (SGP), a set of agreements between eurozone countries to guarantee the euro’s stability, is still in force but has been suspended since the start of the pandemic to give governments room to increase their public spending. increase to cope with the crisis. 

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Despite different views, Spain and the Netherlands are working together 

Currently, the intention is that the agreements within the pact would remain frozen for the whole of 2022. Nevertheless, Spain and the Netherlands think it is time to reopen the debate on this. Moreover, it is remarkable that Spain and the Netherlands are doing this jointly. In the past, the Netherlands has proven itself as one of the ‘economical countries’. Whereas Spain, together with Italy and France, is on the other side and is arguing for a thorough reform of the current regulations. However, because both heads of government have the same vision on many points, they have decided to join forces. 

Challenging situation change of EU budget rules 

Both the Dutch and Spanish finance ministers will discuss the macroeconomic situation. Also, the uncertainty caused by the war in Ukraine, rising energy prices, inflation, and faltering supply chains on Monday. The talks will continue on Tuesday. Then they will include the upcoming G20 summit at the end of this year, where Russia’s participation will be discussed. Several G20 countries have indicated that they do not want to participate if Russia remains part of this summit. 

All these issues raise doubts as to whether the suspension of the pact should be maintained. Nevertheless, the Spanish finance minister believes that the euro countries must arrive at an adjusted set of rules in the short term that promotes economic growth, creates jobs, and where investments can be made for the future. 

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