Sunday

26th Feb 2017

Focus

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”.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

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.

EUobserved

When two worlds collide

Two worlds collided at the end of last week. The shrill, uncompromising one of British politics and the technocratic, dry, world of the European Commission.

EU parliament approves Juncker commission

MEPs have approved Juncker's new EU commission, with a slightly smaller majority than in 2010, and following a number of concessions on portfolios.

News in Brief

  1. Spanish court jails former IMF chief Rato
  2. Macron proposes Nordic-style economic model for France
  3. Germany posts record high budget surplus
  4. Labour ousts Ukip in Brexit homeland
  5. Dutch lower house approves EU-Ukraine treaty
  6. WTO says Russian pork ban was illegal
  7. Belgian nuclear plant made 'significant progress' on safety
  8. Report: Commission gauging EU support for Poland sanctions

Stakeholders' Highlights

  1. EURORDISJoin Rare Disease Day and Help Advocate for More Research on Rare Diseases
  2. European Healthy Lifestyle AllianceStudents Who Are Considered Fit Get Better Grades in School
  3. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  4. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  5. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  6. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  7. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  8. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  9. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  10. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  11. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  12. Centre Maurits CoppietersMinorities and Migrations