Budget: Brussels warns about the long-term impact of recovery plans

Reviewing the budgets of the Twenty-Seven, the European Commission is concerned about measures taken by France.

Brussels

In the midst of the second wave of Covid, the budgetary plans of the countries of the euro area for 2021 are passing the examination of the European Commission. Not without a few recommendations, and a call for vigilance in the face of the risk of an explosion in public debts.

2020 is nothing normal. The usual assessment of the budget plans of the Twenty-Seven by Brussels has also been turned upside down. This year, there are no quantified targets. The rules of budgetary discipline having been shelved in March, the exercise is exclusively qualitative. “We must avoid a double-dip recession», Insists Paolo Gentiloni, European Commissioner for the Economy. The Brussels recommendations, much shorter than usual, are unequivocal.

Tax policies must continue to support activity in 2021. Be careful not to end it too soon, as we did during the financial crisis of 2011, insists Vice-President Valdis Dombrovskis. Emphasis is placed on the necessary character “target” and “temporary»Measures adopted in the context of the health crisis. Gold “some measures presented by France, Italy, Lithuania and Slovakia”Do not respect it, points out the European executive.

For France, Brussels puts its finger on the salary increases for health personnel and the permanent reduction in production taxes. These measures – representing some 18 billion euros, or nearly half of the financial effort to deal with the pandemic – “do not appear to be temporary or compensated», Notes the report. Certainly, they “are justified to some extent», Paolo Gentiloni timed. “The contents“Does not pose a problem and no correction is necessary”at this stage“. The concern is rather “on the impact on public finances», Insists the Italian.

The Commission calls for caution for the future because not everything is allowed. Member States must stand ready to “reorient” the efforts “when epidemiological and economic conditions permit“. Brussels is particularly worried about the high level of public debts, especially for the six countries already heavily indebted even before the pandemic, including France, Italy and Spain. Be careful therefore to preserve “the sustainability of public finances“In the medium and long term, insists the Commission. It also points to the risks of imbalances, especially in the countries where they were present before the pandemic. And France and Italy are part of it.

Sense of responsibility

In addition to the emergency response, investments and reforms must be added to make economies more resilient, greener and more digital, also recommends the Commission. Productivity and employment are among the priorities. Because the pandemic put an end to six years of job growth. If unemployment has only increased moderately for the moment, from 6.5% in March to 7.5% in September, the situation will worsen in the coming months, warns the Commissioner for Employment, Nicolas Schmit. Young people and people with temporary contracts will be the main victims. We must invest in training, especially to promote learning and retraining, and strengthen social protection systems, he insisted.

The three commissioners present on the podium this Wednesday all hammered home the importance of the European recovery plan to stimulate growth without affecting the funds of the Member States. Plan whose future hangs on the blocking of Hungary and Poland, joined by Slovenia. All appeal for a sense of responsibility towards European citizens, and hope for a quick solution.

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