Spain and the Netherlands, two countries usually at odds over public spending, have struck a surprising alliance to reform EU budget rules.
The rules, known as the Stability and Growth Pact (SGP), oblige member states to implement financial policies that keep their budget deficit below 3% and their public debt below 60% of GDP .
The GSP has been the target of much criticism for its complexity, biased application and patchy compliance. The EU decided to suspend the rules in March 2020 to combat the fallout from the pandemic and inject generous fiscal support into the economy.
Member States are now immersed in a debate aimed at reform the GSP before its reactivation in 2023.
In an unexpected move, Spain and the Netherlands offered a common non-paper influence discussions. While they make no changes to the 3% and 60% targets, they suggest a “gradual but ambitious” pace to reduce debt, the key issue on the table.
Both countries believe that the rules will be easier to apply if governments are “empowered” to come up with their own budget plans that take into account national needs and characteristics.
“Let’s not waste energy and time on superficial differences. Let’s focus on common ground,” Dutch Finance Minister Sigrid Kaag told a news conference alongside her Spanish counterpart. Nadia Calvino.
Kaag and Calviño insisted that the new budgetary framework should be “simple”, “transparent”, “credible” and “realistic” and treat all member states equally. They said the SGP should prepare the EU for the next economic shock and promote greater investment in green and digital transitions.
The European Commission has estimated that the double effort will require nearly €650 billion in annual investment until 2030.
Watch the explanatory video above to learn more about the Spanish-Dutch proposal.