In 2022, this will be one of the most difficult issues for the European Union to settle.
Around thirty people, including CFDT head Laurent Berger and former minister Nicolas Hulot, have asked Brussels to exclude all costs associated with the ecological transition from the calculation of the public deficit. The signatories believe that the present financial regulations are "incompatible" and "unsuited" to the ecological, economic, and social issues that they face.
In 2022, this will be one of the most difficult issues for the European Union to settle. When it will be essential to fund the ecological transition, what new budgetary rules should be envisaged to replace the existing ones, including the renowned 3 percent of GDP level for the public deficit? A letter signed by approximately thirty people, including the CFDT's Laurent Berger, former minister Nicolas Hulot, LREM deputy Bénédicte Peyrol, and Cécile Duflot, general manager of Oxfam France, was published this Friday in the journal "Alternatives économiques."
The present fiscal laws are "incompatible" and "unsuited to today's ecological, economic, and social issues," according to the report. The signatories claim that they have "restricted public investment in all Union nations for ten years." "It is important to open up the potential of making public climate investments," according to Shahin Vallée, an economist at the German Council for Foreign Relations and a signatory to the petition. The European Commission, on the other hand, has set a goal of decreasing net greenhouse gas emissions by at least 55 percent by 2030. This will need massive public and private funding.
This family also includes Joseph Stiglitz, the Nobel Laureate in Economics. In a piece published this week in the Financial Times, he said, "The EU would take a big risk if it resorted to the old, discredited standards."
Take all green public spending out of the deficit calculation
According to the article, future public investment required for the ecological transition shall be excluded from the computation of the public deficit. Not just investments should be removed from the computation of the Member States' public deficit: "assistance for green investments by families and companies, vocational training, and support for employees in transition" should also be eliminated. As a result, our suggestion goes beyond what the Bruegel Institute offered to the euro zone finance ministers on September 10 and 11. The analysts at the Brussels think tank were happy to leave out the investments required for the ecological transition, which are expected to cost between 0.5 and 1 percentage point of GDP each year over the next ten years.
The goal of the document is for the first signatories to start a debate on budgetary regulations before France assumes the EU Presidency on January 1st. "During the German campaign, the debate on fiscal laws was pretty bad," Shahin Vallée remarked. He also believes that the French would be hesitant to start the discussion in the first semester of 2022 because the government "may have the reputation of being a bad student in Europe on the budgetary plan," which would discourage him from doing so.
A difficult discussion
Of course, getting member nations to agree on common norms will be challenging. The Old Continent's northern nations seek to prevent the Old Continent's southern countries, who are perceived to be more wasteful, from becoming "stowaways" and not stabilizing their public finances with new regulations that would leave them with too much room. Eastern nations, which are heavily industrialized, want the ecological transition to be as slow as possible. In any event, the member states risk failing to achieve an agreement before fall 2022, when the nations will have already begun planning for the fiscal year 2023. The debate is still going on.
[Source : LesEchos]
