The European Union's planned new fiscal rules cannot give governments a free hand in the choice of fiscal policies, even if they do offer individual debt reduction paths, European Economic Commissioner Paolo Gentiloni said on Thursday.
Speaking at a Politico economic conference, Gentiloni said the new rules, which the EU hopes to agree on by the end of this year, should have some common standards and benchmarks that would set the frame for the different debt cutting schemes.
Until the COVID-19 pandemic, EU rules obligated governments to reduce public debt by 1/20th of the excess above 60% of GDP every year. But the surge in borrowing to keep economies alive during pandemic lockdowns made that rule unrealistic, prompting a review of the whole EU fiscal framework.
Key to the proposed revision is the option that each government negotiates an individual debt reduction path with the Commission - an option that Germany is concerned could end up in discretionary decisions undermining the common euro currency.
"If we are more differentiated, more gradual and more capable of enforcement, we will also be more effective," Gentiloni said of the proposed changes to the rules.
"This should not, in any way, send a message that we have fiscal policies 'a la carte', decided by each country, negotiated with the Commission without any common reference."
Work on establishing what that common reference could be was now under way, he said, adding the Commission would present legal proposals on the changes in coming weeks.
(Reporting by Jan Strupczewski; Editing by Alex Richardson)
