The EU Parliament and the government of member states have agreed on new rules for budget deficits and national debt, taking into account the current economic situation. These rules will be tailored to the specific circumstances of each EU country, with clear minimum requirements for reducing debt ratios among highly indebted nations.
In addition to these new measures, the EU has also suspended its previous rule that a member state’s debt level must not exceed 60 percent of economic output. The general government financing deficit must now be kept to a minimum of three percent of GDP, rather than two percent as it was previously. This change is due in part to the Corona crisis and the Russian attack on Ukraine.
If a state violates the three percent deficit limit, they will be subject to an annual fine of at least 0.5 percent of GDP. This new rule is intended to help ensure that all EU countries remain financially stable and sustainable in the face of future challenges.
The agreement was based on proposals from the EU Commission and has been widely supported by member states. However, some critics argue that these reforms may weaken the so-called Stability Pact, which is designed to maintain financial stability within the EU. Nonetheless, it is expected that this new rule will be confirmed by both the EU Council of Ministers and the plenary session of European Parliament before it becomes official policy.