Facts: Government debt in the EU
This is how large the national debts of the EU countries are in relation to their GDP, according to the European Commission’s calculations from October:
Greece: 182.1 (percent of GDP)
Czech Republic: 43.5
Euro countries: 94.2
The whole EU: 86.4
The EU’s tough budget rules mean that member states must keep their national debts below the equivalent of 60 percent of GDP and not have budget deficits above three percent. However, many people have problems getting there – and it has not been made easier by the corona pandemic, rampant inflation and the energy crisis in the wake of Russia’s war in Ukraine. Increasingly critical voices have also been heard that the rules make it difficult for the countries to invest and finance things that will make the economy better in the longer term.
The European Commission now hopes to remedy the problems with the help of a substantial update of the rules. The requirements remain, but to get the Member States to really act, they must be given more time and more tailored measures.
“EU countries face significantly higher debt and deficit levels that vary widely. New challenges, such as the green and digital transitions and energy issues, force us to make major reforms and investments over many years. To deal with it, we now present an outline of simpler and more efficient financial governance,” says the Commission’s Finance Vice-President Valdis Dombrovskis in a press release.
Above all, the idea is that the countries should come up with plans for how to at least ensure that the debt situation goes in the right direction over a period of four years. At the same time, the penalty is reduced for those who do not behave. In practice, it should make it easier to still punish someone, in contrast to the current situation when the threat of a fine has basically never been used.
Today’s “sketch” is now to be followed by sharp proposals from the European Commission during the beginning of next year.