France to suspend EU fiscal rules until 2021 – EURACTIV.com

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France on Thursday (May 21) called on the EU to end its tight fiscal rules for member states for this year and next year due to the severe economies affected by the coronavirus pandemic.

“Nothing would be worse than reviving the economy while curbing public spending,” said French Finance Minister Bruno Le Maire to the newspaper Le Figaro.

“This is the mistake we made in 2009,” he added, referring to the aftermath of the 2008 financial crisis.

“We hope that the rules of the Stability Pact will be suspended for 2020 and also for 2021,” said Le Maire.

According to EU rules, member states cap their budget deficits at 3% of GDP and maintain a debt-to-GDP ratio of no more than 60%.

Earlier this week, the Director of the European Central Bank, Christine Lagarde, said that the coronavirus crisis would be a good opportunity to modernize the EU’s Stability and Growth Pact, its main economic policy guidelines that set the budgetary rules.

The pact was effectively suspended by the crisis, with Brussels agreeing to allow the 27 members to go far beyond these spending and borrowing limits as they try to revive their economy.

“I think the terms of the Stability and Growth Pact should be reviewed and simplified before being put back in place when we emerge from this crisis,” said Lagarde on Monday.

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