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29 September 2010

Corriere della Sera: EU pulls a break on the public debts


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The Commission tightens the rules of the SGP in order to discourage new „Greek cases“.


Brussels aims to get the new rules into place in the middle of 2011 and has proposed a sanction of 0,2% of the GDP for the countries that overspend in the medium term, as well as for those countries whose deficit exceeds 3% of GDP. Contrary to Germany’s proposal, the new sanctions do not include freezing the EU funds for the transgressors. The rules propose that the growth of public spending cannot exceed the GDP growth.  

To emphasize even more the reduction of the public debt, the Commission also proposed that the countries with a debt of more than 60% of GDP, like Italy, will have to reduce the excess by one twentieth every year. Failing to comply, the excessive deficit procedure will be invoked that implies the obligation to submit a deposit free of deposit of 0,2% of HDP. However, Italy plans to use the possibility to postpone the sanctioning procedure and the evaluation of the „large deficit“, considering also private debt as an important factor.  

The Commission also proposed to monitor closely the Member States to prevent crises caused by macroeconomic imbalances like in the cases Ireland and Spain.  

 



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