May 20, 2022

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Kaag: The prospect of smooth handling of EU budget rules again |  the interior

Kaag: The prospect of smooth handling of EU budget rules again | the interior

It will be the second time in a short time that Brussels has turned a blind eye to the not strictly enforced rules for debt and deficits that EU countries are allowed to have. As the rules were bypassed during the Corona crisis and may happen again, Kaag reports to the House of Representatives: “Given the new and alarming exceptional situation in which the Netherlands and the European Union have found themselves as a result of the terrible developments in Ukraine, the possibility of invoking the flexibility of the rules cannot be ruled out again.”

The war in Ukraine also threatens to have serious economic consequences, with soaring prices for energy, fuel and food. Western businessmen are also feeling the effects of the sanctions imposed on Russia.

According to Kaag, it is still too early to estimate the scale of these consequences and what that means for fiscal compliance: “This will have to be reviewed when there is more clarity about the economic and budgetary impact that will occur.”

Commitment to the Netherlands

Minister D66 also carefully explains the Dutch commitment to the discussion on the renewal of European budget rules, which will take place in the coming months. In any case, our country wants to adhere to the well-known rules of government debt of no more than 60 percent of national income and a budget deficit of no more than 3 percent per year, standards that, by the way, southern European countries in particular have not been able to comply for some time .

Given the large debts of those countries, which only increased during the Corona crisis, the Netherlands is ready to consider the rules on phasing out. Now the rule of thumb is that a country mired in the red should cut an average of 1/20 of its debt above the 60 percent level each year. But this is not possible for countries with high debt. The Netherlands is ready to consider “replacement or modification” of that rule.

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On the other hand, the Netherlands would like to see better implementation of European financial rules. In addition, Kaag would like to see countries with lower debt, such as the Netherlands, also impose less stringent and detailed fiscal rules. They will be “less important” to them.