EU, more time for those who make reforms and invests. But it remains constraint 3% – The Messenger

EU, more time for those who make reforms and invests. But it remains constraint 3% – The Messenger

Green light from the European Commission to “deviate temporarily” on public finances, but the bond of 3% is untouchable.

The new guidelines on the flexibility of the EU Commission require more time to achieve the fiscal targets for those who make reforms and spin-off of investments co-financed by the EU, but only if you do not ef the roof of the 3% deficit, rehabilitation less hard in times of economic difficulties.

“The Commission does not propose any changes to the rules exist, then it will not be made any legislative step and these guidelines will be applicable immediately, “explains the Commission communication on flexibility. The aim, says, is “to encourage the implementation of reforms, promote investment, especially in the context of the new strategic bases (EFSI) plan Juncker, and better take into account the economic cycle in every state.”

Three major aspects of communication. First, the Commission “will consider the positive impact of the reforms,” ​​both for those in the preventive arm of the Stability Pact (ie has a deficit below 3%) and for those in the corrective arm (that is under procedure deficit). Reforms must be “important, with verifiable positive impact on the budget, and must be implemented.”

The Commission will assess the reforms before allowing a “temporary deviation from the medium-term objective or the path to it ». This deviation can not be greater than 0.5%, and must be secured a “safety margin” so that the 3% deficit is never exceeded.

The second aspect is defined “clause for investments “and makes it clear that the countries that are in the preventive arm may temporarily deviate from the objective to make investments in projects co-financed by the EU as long as they comply with the conditions. Their GDP must be below potential (output gap greater than -1.5%), the deviation must not lead to non-compliance with the 3% deficit.

The third aspect clarifies how to calculate the ‘up ‘and’ down ‘the economy, creating a new’ matrix that will allow you to adjust the pace of structural efforts required under the economic cycle of
 each one.

“A historic turning point,” says Gianni Pittella, leader of the Socialists in the EU Parliament. “The funding provided by the European plan and co-financing for the Structural Funds will not be counted in the Stability Pact,” says Pittella, and this will allow “thousands of local and regional administrators, who could not spend European funds because they did not have resources available ‘to use them.