16 February 2023

EURACTIV: March showdown: When EU fiscal rules meet industrial policy

When EU leaders meet in Brussels at the end of March, the conversation over how Europe should subsidise its green transition will clash with the discussion over the reform of the bloc’s fiscal rules, providing opportunities for a compromise deal.

EU leaders already discussed the European Commission’s “Green Deal Industrial Plan” last week in Brussels. However, they left the thorny issues over how exactly to find a balance between loosened state aid rules and the risks of fragmenting the single market for their meeting at the end of March.

In the meantime, the Commission should come forward with a more detailed proposal for the EU governments to discuss in the coming weeks.

At the same time, European governments are under pressure to agree on new fiscal rules.

EU governments have to prepare their 2024 budgets and a return to the old fiscal rules is unrealistic given the current debt levels, and even counterproductive in light of the investment needs for the green transition.

Also, the Commission is not willing to keep applying the general escape clause, so the new rules will have to crystallise from under the rhetoric of “fiscal prudence” and “encouraging investments” sooner rather than later.

Although EU economy ministers made little progress when they met in Brussels on Tuesday (14 February), the Commission’s Valdis Dombrovskis maintained that the discussion was “approaching crunch time”.

What he wants is clear guidance from the EU leaders during their meeting on 23-24 March, so that the Commission can table a specific legislative proposal at the end of March or in early April.

Everything is on the table

To Nils Redeker, deputy director of the Jacques Delors Centre in Berlin, this timing provides the opportunity for a package deal.

“The March European Council will be the one moment where everything is on the table,” he told EURACTIV....

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