EU Seeks to Reform Fiscal Rules for More Flexibility on Deficits and Debt

The EU is reforming its longstanding fiscal rules to adapt to new economic realities like COVID-19, war, inflation. The 3% deficit and 60% debt limits stay but with more flexibility.

Frictions remain on pace of debt reduction, with high-debt countries wanting flexibility and Germany pushing for binding cuts.

Investments for green transition and tech seen as crucial but question is how to budget for them under fiscal rules.

Enforcement of rules has been uneven so proposals aim to speed up process and introduce smaller fines.

Concerns over balance of power between Commission and member states in proposed new system of fiscal plans.