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EU Plans to Propose Member States to Set Their Own Targets for Reducing Budget Deficit for 2024

The European Commission (EC) is expected to propose that EU governments set their own targets for reducing their budget deficits in 2024. The proposal aims to reduce the number of debts in individual member states.

The EC, which is the EU’s executive branch, will release the EU’s fiscal strategy for the fiscal year 2024 today. The proposal is meant to help coordinate the budgetary policies of the 27-member bloc. This comes as the European Central Bank (ECB) seeks to reduce inflation, which has hit a record high.

Under existing regulations, EU governments are required to comply with common fiscal rules. They must reduce their debt by one-tenth of what exceeds 60% of gross domestic product (GDP) annually, and they must keep their budget deficits below 3% of GDP. However, these regulations were suspended during the COVID-19 pandemic and are set to remain suspended until 2022 due to the challenges posed by the Russo-Ukrainian war.

According to EU officials, “EU member states must set their fiscal targets in line with the fiscal rules set out in the EC reform proposals to ensure that the public debt ratio remains at an appropriate level and the mid-term budget deficit will be below 3% of GDP.”

The proposed changes would allow EU member states to set their own targets for reducing their budget deficits, rather than having to adhere to a common set of regulations. This would enable individual member states to tailor their budgetary policies to their specific needs and circumstances.

The proposal is expected to generate some debate among EU member states, as some may view it as a relaxation of fiscal discipline. However, proponents argue that it is necessary to provide member states with more flexibility to deal with the economic fallout from the pandemic and to support their economic recovery.

The proposal is part of a broader effort by the EU to promote economic stability and growth in the aftermath of the pandemic. The EU is currently working on a range of initiatives to boost economic recovery, including a €750 billion ($889 billion) recovery fund.

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