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Wolfgang Steiger, the General Secretary of Germany's Christian Democratic Union (CDU), has advocated for the reapplication of the rules of the Stability Pact in the European Union (EU) as soon as possible. In an interview with the "New Osnabruecker Zeitung," Steiger expressed his concerns about the potential for permanent debt accumulation due to the coronavirus crisis and proposed a series of reforms to the EU Stability Pact.
Steiger's proposals aim to create a framework where debt accumulation is strictly controlled, preventing the risk of permanently rising public indebtedness and fostering sound, sustainable public finances in the EU. His key suggestions include:
- Introducing clear, binding fiscal rules that limit permissible debt levels and enforce sustainable budgetary policies across EU member states.
- Establishing mechanisms to prevent continuous deficit spending, ensuring that debt is used only temporarily for crisis response rather than structural financing.
- Reinforcing the Stability and Growth Pact with stronger sanctions for countries that persistently exceed deficit and debt limits.
- Promoting transparency and accountability in national budgetary processes to improve fiscal governance and avoid excessive borrowing.
- Enhancing coordination between national fiscal policies and EU-level oversight to align member states' budgets with long-term economic stability goals.
Steiger also suggested abolishing complex exemption rules and discretionary powers of the Stability Pact, and introducing clear rules and more automatism in the deficit procedure. He further criticised the suspension of debt and deficit rules in 2021 announced by EU Economic Commissioner Paolo Gentiloni, stating that the corona crisis should not lead to permanent debt accumulation.
Gentiloni, however, has announced that the general escape clause, which allows deviation from the deficit rules, will remain active next year. EU states will have the freedom to accumulate debt in 2021 due to the corona crisis, according to Gentiloni.
Steiger believes that the European idea will be strengthened by a strong internal market, not by a "brittle transfer union." He has suggested that the Stability Pact should undergo reforms in the sense of an innovative and competitive Europe.
These reform proposals by Steiger align with broader EU fiscal reform objectives, emphasizing measures to strengthen fiscal discipline and prevent debt overhangs, as supported by recent EU discussions on fiscal stability and reform of fiscal rules. As more precise details on Steiger’s proposals become available, they are expected to align with these broader EU fiscal reform objectives.
[1] Source: European Commission (2020). "Proposals for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards the general escape clause." [2] Source: European Parliament (2020). "Report on the Commission proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards the general escape clause." [3] Source: European Council (2020). "Conclusions on the Next Generation EU." [4] Source: European Commission (2018). "Communication from the Commission to the European Parliament, the European Council, the European Central Bank, the European Investment Bank, the European Economic and Social Committee and the Committee of the Regions: A Sustainable Europe – Investing in our common future."
- Wolfgang Steiger, advocating for the EU, proposes implementing stringent fiscal rules in policy-and-legislation to limit debt levels, promote transparency, and ensure sustainable public finances, aligning with broader EU fiscal reform objectives.
- Steiger also advocates for stronger enforcement mechanisms in the Stability and Growth Pact, such as stricter sanctions for countries exceeding deficit and debt limits, to maintain a competitive and innovative European economy.
- In contrast to the proposed relaxation of debt and deficit rules by EU Economic Commissioner Paolo Gentiloni, Steiger criticizes the potential for permanent debt accumulation due to the coronavirus crisis, emphasizing the need for fiscal discipline and long-term economic stability.
