Spain wants EU members to have leading role in setting own fiscal targets

11:00 am Monday, February 07th, 2022

MADRID (Reuters) -Spanish Economy Minister Nadia Calvino suggested on Monday that each EU member state should play a leading role in setting its own fiscal targets instead of having common goals defined by the bloc’s rules.

EU countries are currently discussing a change to the fiscal rules, officially called the Stability and Growth Pact, that limit government borrowing to protect the value of the common euro currency – shared by 19 states.

The rules have been suspended since 2020 to give governments leeway to fight the COVID-19 pandemic.

With growth now back on track, the rules were to be reinstated from the start of 2023. The discussion focuses on the need to acknowledge the EU’s new economic realities – the high post-pandemic public debt, wide deficits and the need for huge public investment to fight climate change.

“For the future, member states must play a leading role in setting their own fiscal targets,” Calvino told an event in Madrid she was attending alongside her Irish counterpart and the chairman of euro zone finance ministers, Paschal Donohoe.

The issue is politically divisive as EU countries with more fiscal discipline are wary of their more profligate partners and EU officials said last week that talks were likely to last well into next year, leaving the bloc in a quandary over a framework for 2023 to cautiously reduce spending.

Donohoe, who told a news conference that Spain’s view on the future of the fiscal rules was well known across the bloc and that he was confident of an eventual agreement, said the plan for 2023 was a more pressing matter in the coming weeks.

“That work is already under way and I am confident as we move into March that we will have guidance in place for how we can have the right bugetary policies (for 2023) to continue to support a recovery in Europe,” he said.

(Reporting by Inti Landauro and Belen Carreno in Madrid, Padraic Halpin in Dublin, editing by Andrei Khalip, Mark Heinrich and Nick Macfie)