Will the draconian cuts return? European Parliament votes for strict budget rules – Joop

The European Parliament this week approved new budget rules for the EU member states. Opponents say the rules will lead to draconian cuts. For example, environmental organizations fear that less money will be available for necessary climate investments. Philippe Lamberts of the European Greens speaks of “debt fundamentalism”.

The existing European budget rules were put on hold at the start of the corona crisis. However, a year ago the European Commission proposed tightening the reins again. Now that the European Parliament has given the green light, only the European governments still have to agree by the end of this month – a formality, according to insiders. The new rules are expected to come into effect next year.

EU member states that have a national debt of more than 90 percent of GDP (such as Italy, Greece or Belgium) must reduce their debt by 1 percent per year. If the national debt is between 60 and 90 percent of GDP, the debt must decrease by half a percent every year. Because the Netherlands has a national debt of less than 50 percent, this rule has no direct consequences here.

This is different with another budget line. In times of economic growth, the financing deficit may soon amount to 1.5 percent. This should make it easier to deal with setbacks when the economy is bad. Two of the parties that are now negotiating an ultra-right cabinet (PVV and BBB) want to increase the deficit in order to do nice things for right-wing people.