Skip to main content

EU clash over budget rules

 France and Italy have launched a push to revamp EU budget rules to spur investment and drive growth in a move likely to face a frosty reception from fiscally conservative member states.In a joint article in today’s Financial Times, Mario Draghi, Italian prime minister, and Emmanuel Macron, French president, call for debt raised to fund investments in priority areas to be “favoured by the fiscal rules”.The EU suspended its strict rules governing member state deficits and debt during the pandemic. It is now consulting over reforms to the regime for when the Stability and Growth Pact is eventually reimposed. Italy and France are among states seeking a less rigid approach to state borrowing.While EU members needed to bring down levels of indebtedness, public spending on future priorities “actually contributes to debt sustainability over the long run”, Draghi and Macron argue in their article.“Our strategy is to curb recurrent public spending through sensible structural reforms,” they say.“And, just as the rules could not be allowed to stand in the way of our response to the pandemic, so they should not prevent us from making all necessary investments.”Economists and some policymakers argue the existing SGP framework is ill-suited to the heavy debt burdens and massive public spending requirements that Europe faces in coming decades.France and Italy did not give any details of what the new SGP should look like. Still, some economists have been arguing for a “golden rule” to be introduced permitting certain investments — for example, green projects — to be stripped out of deficit or debt calculations. HOWEVER, one EU diplomat warned that northern capitals would “dig in” and oppose any such carve-outs from public spending rules, favouring more incremental changes to the SGP.The discussion will gather momentum early next year. Officials want it concluded in the first half while France holds the rotating EU presidency.Northern states are sceptical of golden rules, worrying they may lead governments to ignore swaths of public borrowing.The position of the new German coalition government will be critical. Politicians in Berlin have been discussing raising funds without violating the country’s constitutional debt break.The Dutch coalition said it remains “committed to a sound and prudent macroeconomic policy and necessary reforms by member states, aimed at sustainable debt, higher economic growth and upward convergence”.

Summarised www.sba.tax

Labels:

Comments

Post a Comment

Cloud Bookkeeping

H&M struggles with profitability.

  H&M blamed high clothes prices ,  its exit from Rus­sia and a cost-cut­ting pro­gramme for an unex­pec­tedly large col­lapse in its earn­ings as the world’s second-largest fash­ion retailer’s struggles with prof­it­ab­il­ity con­tinue .  Oper­at­ing profit plunged 87 per cent to SKr820mn in the fourth quarter to the end of Novem­ber from a year earlier .  Shares in H&M fell more than 4 per cent to SKr125 . 80 yes­ter­day ,  hav­ing lost nearly half of their value since their recent peak in April 2021 .  The Swedish retailer ,  which lags behind Indi­tex ,  the Span­ish owner of Zara ,  in sales and prof­it­ab­il­ity ,  launched a SKr2bn cost-cut­ting pro­gramme last year that included 1 , 500 job losses . H&M’s sales in the fourth quarter were up 10 per cent to SKr64 . 4bn but flat in local cur­rency terms .  It said sales from Decem­ber 1 to Janu­ary 25 had increased 5 per cent in local cur­ren­cies .  «Sales in ...
2 comments
Read more

Commercial properties continue to fall

  UK commercial property values and rents are projected to «tumble off a cliff edge» in the first quarter of 2023, as estate agents warn offices will fare worst as prices fall. A survey of more than 400 commercial agents forecast a 2.9 per cent decrease in prices per square foot across the industry in the first three months of the year, with offices falling 3.1 per cent. «Where we saw the market stop still, we will see the market finding its level, people working out where things are, where value is,» he said. Listed vehicles have already seen this valuation drop in their share prices, with real estates investment trusts such as Land Securities and British Land falling by a fifth or more this year. According to the RIB estate report, offices are expected to suffer the most significant sales price falls, with nearly a third of respondents expecting them to come down by more than 5 per cent. In addition, the survey projected a 1.3 per cent fall in rents per square foot over the perio...
Post a Comment
Read more

BoE is considering to increase deposit guarantee.

  According to anonymous sources, the Bank of England is considering reforming its deposit guarantee scheme. The move comes in response to concerns that the current system may not be sufficient to protect customers in case of a bank failure. The Financial Services Compensation Scheme guarantees deposits up to £85,000 per person per institution. However, some experts have raised concerns that this may not be enough to prevent a run on banks in a significant financial crisis. As a result, the Bank of England is reportedly considering several options for reforming the scheme, including increasing protection and introducing more stringent bank regulations. A final decision on any changes will be made later this year. One option the Bank of England considers is increasing the protection offered by the deposit guarantee scheme. This could involve raising the maximum amount guaranteed per person or extending coverage to more types of deposits. Another possibility is to introduce more stri...
Post a Comment
Read more