On 5th February 2020, the European Commission launched a debate on the EU Stability and Growth Pact. A key issue is how public investments could be promoted. From the AK’s point of view the time has come for a Golden Investment Rule.
With its “Communication the on Economic governance review”, the European Commission launches a consultation with other EU institutions and relevant stakeholders, which should continue until mid-2020. The key question is, whether and how the current fiscal rules could be adjusted to promote public investments. Despite of significant economic growth in recent years, they have not reached the level prior to the crisis.
In particular maintaining the limit of 3 % as maximum budget deficit in national households and the maximum debt level of 60 % in recent years have resulted in public investments not being made and budgets being balanced instead. However, especially in view of the necessary investments for Europe’s Green Deal and the challenges of digitisation, the EU needs massive public investments in the coming years to enable sustainable growth. Apart from that, the Commission would like to review within the scope of this debate, whether economic imbalances between Member States were reduced and whether the alignment of economic output at high level has been improved.
From the point of view of the Chamber of Labour, the time has come for a Golden Investment Rule, based on which budgetary scope for public investments will be increased. These public investments would contribute to social prosperity, improve the distribution and employment situation and support the achievement of ambitious climate and energy policy objectives. Apart from that, these investments increase the public capital stock, which benefits several generations. For this reason, financing can also take place over several generations. In particular, the costs of non-action must be considered: by maintaining the target to reduce global warming to 1.5 degrees alone, the global economy would in all probability save 20 to 30 trillion Dollar (17 to 25 trillion Euro). This magnitude alone should be reason enough to invest massively in the sustainability turnaround. In addition, Europe also needs social investments, such as high-quality childcare, extra-curricular supervision, education and training, life-long learning as well as effective health and long-term care.
Evelyn Regner, SPÖ MEP, also emphasised the necessity of more scope for public investments: “The current financial framework does not enable us to cope with future social, environmental and economic challenges. More sustainable investments are required and the fiscal framework must be adapted accordingly."
MEP Sven Giegold of the Greens expects the Commission to provide concrete figures for individual countries, also hinting at Germany’s above-average account surplus, which weakens the stability of the Eurozone. He also emphasises that one could not concentrate just on green investments, but that promoting all investments would be necessary: “This does not only advance digitisation and climate change, but also other public goods such as research, health and education. To ensure that the rules have a real countercyclical effect, they must allow governments to spend less in good times and more in bad times.”
In the coming weeks, the Commission will organise discussions and events in addition to public consultations. Building on this, concrete proposals for amendments to the existing legislative texts shall be presented by the end of the year.