Yesterday came the turning point on the reform of Stability pact. During the extraordinary Ecofin meeting, organized via video link, an agreement was reached on the Franco-German compromise, to which Italy contributed. Strongly critical until recently, the Italian government said it agreed in the name of the “spirit of compromise”. “A common sense compromise has been found, the Pact is an improvement compared to the past”, the satisfied comment of the Prime Minister Giorgia Meloni. The text defines “clearer and more realistic” fiscal rules, according to the participants in the negotiation, with the aim of guaranteeing investments and reforms.
The new Stability Pact appears to be much more complex than the old one and sets a series of objectives: first of all, maintaining a rigid fiscal sustainabilitybut also don’t drown growth by keeping in mind investments And interest on the debtin particular in a three-year transitional period, from 2025 to 2027. The path of structural reduction of the deficit for countries like Italy has a fixed parameter, 0.5%, but the speed of the correction can change: a government can ask the EU Commission “to agree on a technical trajectory that does not block investments and takes into account the increase in interests”.
At Berlin’s explicit request, the Stability Pact includes the safeguard that obliges countries that have already fallen below the 3% threshold to reach 1.5% of the deficit/GDP in order to have an anti-crisis buffer. One expected exit strategy for Member States with a debt greater than 90% of GDP, i.e. the reduction of the deficit by 0.25% per year over a total of seven years instead of 0.4% over a total of 4 years. The only regret for Italy, confirmed by Meloni, concerns the Europe’s “no” to golden rule on investments. But the government has no intention of standing by and watching: “The battle continues.”