Dáil Éireann Debate, Tuesday - 15 June 2021
381. Deputy Mairéad Farrell asked the Minister for Finance his views on the reform of the EU Fiscal Rules Stability and Growth Pact as they currently stand; if he will be making a submission to the Commission’s public consultation which is reopening in the second half of 2021; and if he will make a statement on the matter. [20512/21]
View answerThe European Union’s fiscal rules, as set out in the Stability and Growth Pact (SGP), are an integral part of the EU’s broader economic governance framework. This framework has evolved significantly over the past two decades, particularly following the economic and financial crisis a decade ago, which saw the rules strengthened through the adoption of the so-called Six- and Two-pack legislative packages. Early last year, the European Commission presented a formal review of the Six- and Two-pack, including the launch of a public consultation on the operation of the fiscal rules. Discussions around this review were paused to allow Member States to address the immediate challenges of the pandemic, with the public consultation suspended.
While compliance with the fiscal rules had improved across all Member States pre-pandemic, the rules have become increasingly complex over time. Thus, I believe it is necessary to discuss potential options that could improve the fiscal governance framework. In particular, I support efforts to improve the transparency, predictability and simplicity of the fiscal rules. While some flexibility is needed in the rules to respond to economic circumstances that are genuinely beyond the control of Member States, as evidenced by the application of the General Escape Clause in response to the pandemic, it is equally important to ensure that the rules are enforced consistently. The current rules’ reliance on unobservable variables such as the output gap, which directly affects the structural balance, also impacts the reliability and communicability of the framework. My Department has previously highlighted this on several occasions.
In relation to the Commission’s public consultation it is important to note the Commission’s intention, as set out in the Communication of March 3rd on the fiscal policy response to the pandemic, to relaunch the public debate on the economic governance framework once economic recovery takes hold. I fully support this position and welcome the planned resumption of the public consultation once economic conditions allow. My officials and I will continue to actively engage in discussions in this area at the European level.
