New European budget rules will also be felt in our country: “We must make an effort of 5 billion every year”

The heated debate about the new European budget rules revolved around one central question. Will they lead to new savings or, on the contrary, do they still offer Member States sufficient flexibility to invest in, for example, the climate transition and defense? Opinions were strongly divided, partly because it is an ideological issue and because it is “a controversial matter between the member states”, as MEP Hilde Vautmans (Open VLD) noted.

The two well-known thresholds of the old Stability Pact remain in place: 60 percent for the government debt and 3 percent for the annual budget deficit. Member States that cross one of these two limits will from now on have to draw up a four-year plan in consultation with the Commission, setting out the permitted public expenditure and the planned investments and reforms. Countries that do their best in this area can count on an extra three years. But at the end of those four or seven years, the deficit must be below 3 percent and the debt ratio must move “clearly” towards 60 percent.

Gruyère cheese

At Germany’s insistence, it has also been agreed that countries with a debt ratio above 90 percent, such as Belgium, must reduce their debt by an average of 1 percentage point per year over those four or seven years. Anyone who ignores the rules still risks ending up on the penalty bench.

On the other hand, countries that do not achieve the targets can argue that this is the result of investments in climate, digitalization, defense or energy. That is why Johan Van Overtveldt (N-VA) previously described the new rules as “a delicious Gruyère cheese”.

It is clear for the radical left and the Greens. “The new rules will lead to cuts in perpetuity,” said Frenchwoman Manon Aubry. “The new austerity policy is a disaster for green and social investments,” responded Sara Matthieu (Green). “While the US, China and Japan are investing massively in green industrial policies, Europe is in danger of getting itself stuck. So we lose twice.”

Some Social Democrats in particular were distressed. Their Italian counterpart in the European Commission, Paolo Gentiloni, was the author of the original proposal. They also provided the negotiators on behalf of the European Parliament. “This is not the reform I dreamed of,” acknowledged Portuguese Margarida Marques. “But we have secured investments in climate, defense and the social sector.” She pointed out that national co-financing of European projects, which accounts for 1 percent of European GDP, is excluded from the calculation of expenditure.

“Belgium must clean up 27 billion”

But Kathleen Van Brempt (Vooruit), among others, voted against the line of her group: “These rules place various countries, including Belgium, with an enormous task. Our country would have to clear around 27 billion euros in the next 4 to 7 years.” According to her, future-oriented investments are at risk, as is the competitiveness of European companies: “The new rules mean that Europe must abruptly apply the handbrake in the midst of a race with competing trading blocs.” Vlaams Belang also voted against.

“These rules place various countries, including Belgium, with an enormous task”

Kathleen Van Brempt

Member of the European Parliament (Forward)

The three N-VA MEPs voted in favor. “The new rules provide sufficient flexibility so that investments in infrastructure and defense can continue,” said Van Overtveldt (N-VA), who pointed out the importance of healthy public finances during the debate. He only fears that the application will again leave much to be desired: “The new rules also impose discipline, but the Commission must be prepared to pull out the stick when necessary. I fear that this will not happen enough.”

CD&V and Open VLD also supported the agreement: “It offers a good balance between the need to effectively reduce the debt and sufficient flexibility to promote the strategic investments that the EU needs,” said Vautmans. “But I am also aware that Belgium will feel this,” she added. “That means that we will have to make an effort of 5 billion per year. We can do that. That is exactly the effort we will have made in 2024.”