EU should have its own full budget to stabilize economy, survey suggests – Financial Post

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BRUSSELS — The European Union should, like national governments, have a proper budget it could use to stabilize the bloc’s economy if needed, a European Commission survey of academics, think-tanks and other bodies and individuals has suggested.

The 27-nation EU currently has a budget that focuses mainly on equalizing living standards and some common spending policies based on figures that are set every seven years after painstaking debate.

“A majority of respondents support the establishment of a central EU fiscal capacity, in particular for macroeconomic stabilization,” a Commission report on the consultation that was published on Monday said.

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The idea, espoused by economists as a necessary counterbalance to the single monetary policy of the European Central Bank, has failed to gain EU government support in the past.

Member states have up to now resisted change because it would mean transferring more national sovereignty to the EU, tighter fiscal cooperation and, most probably, regular joint EU borrowing and new EU revenue streams to repay the joint debt.

The Commission said the new views came after it posted a consultation online last year, asking for opinions on the EU’s fiscal framework.

Out of 225 valid responses, more than one fifth came from private citizens, it said. Another fifth came from academia and another fifth from trade unions. Non-governmental organizations, independent fiscal institutions and think tanks were also big contributors, data showed.

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Respondents want the rules to be more supportive of economic growth, social issues and fighting climate change, while keeping public debt sustainable, the Commission said.

The people and organizations said “green” investment should get special attention in the rules because of climate challenge, and a large number of them called for the simplification, transparency and stronger national ownership of the rules.

The public consultation is not binding in any way. It is part of a debate on changes to the EU’s fiscal rules, which are now under review.

Most of the views came from Italy, with Belgium in second place and France and Germany not far behind, the Commission said.

The Commission is to present its suggestions as to how to modify the rules, which limit government borrowing to safeguard the value of the euro, by June.

Last year, the EU agreed to unprecedented joint borrowing of 800 billion euros to rebuild its economy after the pandemic through investment that would digitalise it and help eventually cut CO2 emissions to zero.

But the joint debt was clearly marked as a one-off. It came on top of the 1.1 trillion euro regular budget set for all 27 countries for the next seven years, financed from government contributions and tax income already assigned to the EU. (Reporting by Jan Strupczewski; Editing by Andrew Heavens)