The European Parliament and member states have reached an agreement on reforming the rules of control of the European Union budget, aimed at stimulating investments while keeping spending under control.
The agreement involves updating the current rules known as the “Stability and Growth Pact” issued in the late 1990s, which sets a ceiling for countries’ debt at 60 percent of gross domestic product and the general budget deficit at three percent.
European Commission President Ursula von der Leyen welcomed this political agreement, considering that “the new rules will enable European Union countries to invest.”
After prolonged wrangling between Berlin and Paris, the 27 member states reached an agreement last December, and then talks began with negotiators from the European Parliament.
The text was criticized for its many complexities, and left-wing officials considered it a tool to impose austerity in Europe.
Ultimately, negotiators reached an agreement yesterday, Saturday, allowing a vote on the text in Strasbourg before the parliamentary recess that precedes the European elections.
The reforms will be officially adopted after agreement between lawmakers and countries. It will allow member states to apply the new rules to their 2025 budgets.
With the outbreak of war in Europe and the European Union pushing towards an environmentally friendly transition, several countries, led by France, sought to provide more space for funding in these key fields, including arming Ukraine, for example.
While the new agreement maintained the previous restrictions imposed on debt and budget deficits, the text provided more flexibility in the event of excessive deficits.