The European Union has emerged from a period of four extraordinary years for the economy, during which a general safeguard clause was applied, suspending the old Stability Pact and giving member states the flexibility needed to respond to economic shocks. Commissioner Paolo Gentiloni believes that now is the time to turn the page and open a new chapter in economic governance in the EU, which will allow for facing current and future challenges with renewed confidence. The approval of the new fiscal rules by the EU is seen as a crucial step in this process, with the final approval expected to be granted by the EU Council in the coming days.
Gentiloni emphasizes the significance of this moment for the EU economy, noting that the Commission’s proposals for reforming economic governance were presented a year ago, with preparatory work beginning at the start of his mandate. The objective has always been to correct rigid rules that were often not enforced, and the Commissioner believes that this goal has been achieved. While acknowledging that the reform adopted is a compromise and not perfect, Gentiloni highlights its improvements over existing rules. These improvements include strengthening incentives for public investments, green and digital transitions, defense, and reforms; establishing a credible path for debt reduction; ensuring member states take responsibility for their fiscal policies within a European framework; and placing greater emphasis on social and climate considerations.
The Democratic Party delegation in the European Parliament abstained from voting on the reform of the Stability Pact, which Gentiloni jokingly attributed to “internal politics.” He noted that all Italian political parties either abstained or voted against the reform, quipping that they had managed to unify Italian politics through their actions. Despite this political division, the focus remains on the positive outcomes of the new fiscal rules and the potential for addressing economic challenges in the EU more effectively going forward.
The reform of the Stability Pact and the introduction of new fiscal rules mark a significant milestone in EU economic governance, providing member states with greater flexibility and incentives for strategic investments and reforms. Gentiloni believes that the reform represents a step in the right direction, although he acknowledges that it is not without its imperfections. The emphasis on fostering sustainable growth, reducing debt, and integrating social and climate considerations into fiscal policies demonstrates a commitment to addressing the complexities of modern economic challenges in the EU.
As the EU prepares to implement the new fiscal rules, there is a sense of optimism and determination to navigate the economic uncertainties ahead with confidence and unity. Despite political differences among Italian parties, the focus remains on the common goal of strengthening economic governance and fostering sustainable growth in the EU. With a renewed focus on flexibility, responsibility, and inclusivity, the EU is poised to overcome current and future economic challenges and emerge stronger and more resilient in the global landscape. The approval of the new fiscal rules represents a crucial step in this journey towards a more effective and sustainable economic governance framework in the EU.
