Senior EU finance officials have declined to back a change in budget policies that could have lightened the burden of austerity on Spain and other crisis-hit countries. The change involves a new methodology as to how the Commission calculates the "structural deficit".
The change was approved by technical experts at a meeting last week and was expected to be supported at a Tuesday meeting of more senior officials in Brussels. But that decision generated concern in some national capitals about its effects on budget policies, an EU official said. The new methodology will be sent back to the expert committee for further discussions, in an effort to understand what its impact will be on all 28 EU countries.
The change involves a highly technical methodology that the European Commission uses to calculate the "structural deficit", which is the actual budget deficit adjusted for the strength of the economy. The Commission uses the structural deficit to determine how much austerity governments will need to undertake to meet EU budget targets.
The new methodology would have attributed more of the deficit in some countries to the economic slump, rather than lax spending or too-low tax revenues. That would have benefited Spain and some other crisis-hit governments.
Commission spokesman Simon O'Connor said that "the current methodology will continue to be used for the time being". The calculation is based on the Commission's finding that even some of the bloc's weakest economies are operating relatively close to full capacity, which many governments dispute.
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