Republished with full copyright permissions from The Boston News Tribune.

The recent approval by the European Parliament of new fiscal rules has garnered mixed reactions from various members and stakeholders. The revamped EU fiscal rules are viewed by the majority of MEPs as clearer, more investment-friendly, better tailored to individual country situations, and more flexible. The new rules aim to limit accumulated debts and annual deficits, while providing incentives for economic growth and essential investments.

One of the key aspects of the new rules is the increased difficulty for the Commission to initiate an excessive deficit procedure for a member state if essential investments are ongoing. Additionally, all national expenditure on EU-funded programs will be excluded from a government’s expenditure calculation, thereby creating more incentives for investments.

For countries with excessive accumulated debt, the new rules require a reduction of the debt by a certain percentage annually, based on the GDP threshold. Similarly, the annual deficit for a country is also subject to reduction during periods of economic growth, with a specific target set to build a spending buffer for challenging economic conditions.

The new fiscal rules provide flexibility in terms of achieving national plan objectives, allowing for a longer timeframe and additional time that can be granted for various reasons, as deemed appropriate by the European Council. Furthermore, member states with excessive deficit or debt now have the opportunity to request a discussion with the Commission before guidance on expenditure is provided.

The role of national independent fiscal institutions has been significantly strengthened, with the aim of gaining national support for the plans. However, not all MEPs are in agreement with the new reforms, expressing concerns about the emphasis on debt reduction over investment and social spending.

While some MEPs view the reforms as a fresh start and a return to fiscal responsibility, others criticize the new rules for imposing a straitjacket on EU member states and prioritizing debt reduction over investment and social spending.