The European Union's planned new fiscal rules cannot give governments a free hand in the choice of fiscal policies, even if they do offer individual debt reduction paths, European Economic Commissioner Paolo Gentiloni said on Thursday.
Speaking at a Politico economic conference, Gentiloni said the new rules, which the EU hopes to agree on by the end of this year, should have some common standards and benchmarks that would set the frame for the different debt cutting schemes.
Until the COVID-19 pandemic, EU rules obligated governments to reduce public debt by 1/20th of the excess above 60% of GDP every year. But the surge in borrowing to keep economies alive during pandemic lockdowns made that rule unrealistic, prompting a review of the whole EU fiscal framework.
