EU should revise fiscal rules to free up spending on climate - advisers
(Reuters News, 29 Oct 2019) European Fiscal Board has urged an overhaul that would allow states to increase "productive" investments that could boost growth even in belt-tightening periods.
The European Union should revise its fiscal rules to allow governments to spend more on policies to fight climate change and infrastructure, an independent advisory body said on Tuesday.
With the euro zone's economy slowing, the rationale of fiscal rules that were hastily tightened after the EU debt crisis of 2010-12 is now widely questioned.
In its annual report, the European Fiscal Board (EFB) - which advises the EU's executive European Commission - said the rules present "a number of weaknesses."
It urged an overhaul that would allow states to increase "productive" investments that could boost growth even in belt-tightening periods. Among them, it listed investments in digital infrastructure and to help in the "mitigation of climate change".
"Countries could voluntarily top up expenditures beyond their co-financing commitments (to the EU). Additional spending in the identified areas should be excluded from the calculation of the net primary expenditures," it said.
The EFB, which is in charge of assessing EU fiscal policies, proposed similar changes last year but they were not enacted. Its call could carry more weight this year as the European Commission is carrying out a periodic review of fiscal rules.