The Stability and Growth Pact (SGP) is at the heart of European debt rules. The European Commission has currently presented a draft legislation for a reform of these rules. Indeed, a reform would be necessary: (1) necessary because enforcement of the SGP rules is poor and the current reduction paths are unrealistic. In particular, some member states have significantly exceeded the Maastricht debt ceiling of 60 per cent of gross domestic product (GDP). For example, according to Eurostat data of 2022, Greece reached a debt-to-GDP ratio of about 171 per cent, Italy of about 144 per cent, Spain of about 113 per cent and France of about 112 per cent – debt levels that would be difficult to reduce within 20 years, as required by the rules. (2) Would be because a reform should offer a better and more effectively enforceable set of rules than the existing EU debt rules. Why the current bill is not an improvement on the previous rules will be outlined below.
Author: Tim Peter, Policy advisor for the Competitiveness of Europe
This text has originally been published on the Konrad Adenauer Foundation website.