The European Fiscal Board (EFB) recently published its assessment of the EU’s fiscal rules. This report will feed into the European Commission’s review of the Six- and Two-pack which is due to be published by the end of the year. The EFB’s report was also discussed at the recent Ecofin meeting in Helsinki.
The EFB’s report indicates that while compliance with the EU fiscal rules has improved across all Member States, the rules have become increasingly complex and this may have had a negative impact upon ownership. In particular, the current rules’ reliance on unobservable variables such as the output gap, which of course feeds directly through into the structural balance, has impacted upon the reliability and communicability of the framework. My own Department has highlighted this on several occasions.
For this reason, I support efforts to increase the transparency, predictability and simplicity of the fiscal rules. That said, I accept that there are difficult trade-offs involved. This means that finding agreement may be challenging.
My officials and I will continue to actively engage in these discussions.