European Union twists their own rules to fund the Climate Revolution – Are you in favor of that?

Guest essay by Eric Worrall

EU rules designed to prevent out-of-control spending are going awry, as top EU officials plot to circumvent their own fiscal rules and breach the limits debt, to finance the green energy transition.

EU budget introduces debt hole to fight climate change

Policymakers are trying to turn the economy green while keeping EU finances in check.

VIA BJARKE SMITH-MEYER January 14, 2022 6:45 pm

1.2 trillion euros of EU war chest – also known as long-term budgeting – has emerged as a possible solution on how to finance the costly fight against climate change despite the debt burden caused by the pandemic.

Failing that green hole would keep Europe from achieving its own green goals and risk damaging its credibility as a global climate action force. The EU budget could be the solution to avoid that dilemma, according to the head of the International Monetary Fund.

Under normal circumstances, governments would have to limit their budget deficits to 3% of GDP and try to limit their debt to 60% under the EU’s fiscal framework known as the Stability Pact. determination and growth, or SGP. Those rules have been frozen since March 2020 to ensure governments can fight the pandemic without fear of sanctions from Brussels and enact stimulus programs that have pushed debt levels to high. uncomfortable.

The golden rule of losing shine

The EU budget can neutralize that threat by providing capitals with a vault from which they can claim money by presenting spending plans with specific targets that Brussels can alert to. close. “It’s an obvious candidate,” one of the EU officials said, speaking on condition of anonymity, as no decision has been made yet. “Carbon dioxide doesn’t care about borders.”

It can also be an attractive alternative to a different approach – to some thought tank — that would introduce a “golden rule” that excludes green investments from the SGP deficit limit. That yard is losing traction amid fears it will encourage tree washing.

Marco Buti, who leader Cabinet for Economic Commissioner Paolo Gentiloni, on Wednesday in a online debate on the deficit.

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Inflation and hyperinflationary pressures don’t matter what’s in the hearts of the officials who sign the checks, it doesn’t matter if the officials believe they have the best intentions, when they pour so much money into the economy.

The path to hell is paved with good intentions.

Happenning collapse of the Turkish Lira right at the borders of the European Union, is a clear and present lesson in how easily ordinary people can lose faith in a fiat currency. Those fiscal rules were created for a reason.

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