Monday

25th Mar 2019

Loosen EU budget rules in return for support, Socialists tell Juncker

  • Socialist MEPs want Commission hopeful Jean Claude Juncker to back Matteo Renzi's plans on the EU's budget rules, in exchange for their support. (Photo: Carlo Nidasio)

Europe’s centre-left forces are warning that Jean-Claude Juncker will have to support a loosening of the EU’s budgetary rules in exchange for their backing him for the European Commission presidency.

Outgoing Socialist group leader Hannes Swoboda on Tuesday (17 June) suggested EU leaders would likely nominate the former Luxembourg PM as a candidate for the post, commenting that “we will negotiate on a programme with Juncker”.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

But the centre-left’s demands are set to focus on whether Juncker will back Italian prime minister Matteo Renzi in his wish to give governments more space to pursue public investment programmes within the EU’s rules on debt and deficit levels.

The Italian PM is to meet EU council president Herman Van Rompuy on Wednesday, with EU leaders to decide on the presidency nomination at a summit next week.

“It’s Renzi’s condition for agreement on any candidate,” said Swoboda, who added that Juncker’s stance could determine whether the 195-MEP strong Socialist group backs him.

Any nominee for the post would need to secure the support of at least 376 deputies in the 751-member EP, with a vote slated for 16 July.

Under the bloc’s stability and growth pact, governments must keep budget deficits below 3 percent and debt levels to 60 percent. However, despite years of budgetary austerity most EU countries have barely managed the 3 percent deficit limit, while average debt ratios have soared to over 90 percent of GDP.

“We don't demand a change to the pact just to its implementation,” said Swoboda, adding that the proposals should not be a “carte blanche” for government spending but “focus on about how certain productive investments can be exempted from the budget figures”.

The idea of putting in place a so-called ‘golden rule’ to exclude growth-driving investment in public infrastructure projects from EU budget targets has gathered support in recent weeks.

Following talks with France’s Arnaud Montebourg on Monday, German economy minister Sigmar Gabriel signalled that the EU should loosen its rules, commenting that “no one wants higher debt, but we can only cut the deficit by slowly returning to economic growth.”

Renzi has already indicated that the issue will be raised during his country's six-month EU presidency which starts next month.

Italy and France, whose leader Francois Hollande is also affiliated to Swoboda’s centre-left group, would be the main beneficiaries from loosening the rules.

Despite being within the 3 percent limit, Italy’s national debt, already the EU’s second largest at 130 percent of GDP, continues to rise because of its sluggish economic performance.

For its part, despite being given a two year extension to cut its deficit to the 3 percent benchmark, France is projected to run deficits of 3.8 percent and 3.4 percent in 2014 and 2015 respectively.

But re-writing the bloc’s budget rules is unlikely to prove popular with fiscal conservatives.

Van Rompuy is drafting a strategy paper outlining the bloc’s economic priorities for the next five years that will be presented to EU leaders, but Council sources indicated that it would contain no measures to water down the stability and growth pact.

One official described the Renzi plan as “an old Italian idea”.

Analysis

France falls victim to EU's economic powers

Being singled out for censure by the European Commission is nothing new for the government of Francois Hollande. But the timing of the latest veiled threat from Brussels could hardly be worse.

Opinion

Five qualities you need to lead Europe

Five qualities are becoming more important for all leaders, and they transcend the macro economics and geopolitics of today's world.

Magazine

The Spitzen process - a coup that was never accepted

It is a divisive 'Brussels bubble' debate: whether to give the European Parliament more of a say on who becomes the next European Commission president. But the issue goes right to the heart of European integration.

News in Brief

  1. May admits 'not sufficient support' for third Brexit vote
  2. Orban vows more EU 'information campaigns'
  3. May 'effectively out of power', says Scottish leader
  4. May under pressure to resign over Brexit endgame
  5. Million march against Brexit, five million sign petition
  6. Italy first G7 country to sign China Belt and Road deal
  7. EU leaders at summit demand more effort on disinformation
  8. Report: Corbyn to meet May on Monday for Brexit talks

Magazine

The changing of the guards in the EU in 2019

The four most powerful EU institutions - Commission, Parliament, Council and Central Bank will all have new leaders in the coming ten months. Here is an overview.

Magazine

All about the European Parliament elections 2019

EUobserver's new magazine is meant to help readers prepare for the European Parliament elections, no matter their level of knowledge. You can download and read the entire magazine now.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Romania presidency shatters EU line on Jerusalem
  2. The Spitzen process - a coup that was never accepted
  3. Russia and money laundering in Europe
  4. Italy takes China's new Silk Road to the heart of Europe
  5. What EU leaders agreed on climate - and what they mean
  6. Copyright and (another) new Brexit vote This WEEK
  7. EU avoids Brexit crash, sets new date for 12 April
  8. Campaigning commissioners blur the lines

Join EUobserver

Support quality EU news

Join us