Also available in English below

Together with the Think Tank of the Fondation Nicolas Hulot we publish a note by Ollivier Bodin on the reform of the European fiscal rules. The note is in French and English available.

Avec le think tank de la Fondation Nicolas Hulot, nous publions une note d’Ollivier Bodin sur la réforme des règles budgétaires européennes. La note est disponible en français et en anglais.

Version légèrement révisée d’une note publiée par le Think Tank de la Fondation Nicolas Hulot

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Reform of the European budgetary framework and ecological transition:

How not to miss a historic opportunity

Author: Ollivier Bodin, economist, co-founder of Greentervention, former international civil servant

ABSTRACT

Best known for its 3% maximum deficit and 60% public debt rules, the European fiscal framework is now subject to an almost unanimous demand for reform. The debate has started. It will likely grow in intensity over the autumn of 2021 and into the first half of 2022.  The EU fiscal framework sets the rules through which Member States need to trade off between priority spending, support for employment and incomes, and public debt management. The current rules prioritise reducing debt, seen as the major source of instability, over supporting economic activity and financing investments for the future. However, the dire urgency of the social and ecological transition now requires that this order of priorities be reversed.  Environmental depletion and climate change are becoming major sources of instability, while social cohesion is crumbling and the rise in inequality and insecurity is jeopardising our democracies. Taking these risks into account must be put at the core of the new budgetary framework. This means moving away from rigid arithmetic rules and reversing the order of priorities in order to make room for fully informed decision making. Expenditure on sectoral policies supporting social and ecological transitions must access priority funding. Stabilizing the economy must become a key objective, and considerations on the level of public debt must be weighed against the benefits of a preserved environment and a hospitable planet. This is where the real marker of intergenerational justice lies.