“From the coordination of neoliberal policies, we must move to that of strategic investments”


IEuropean leaders have an appointment on 23 and 24 March in Brussels for a summit which will, in all likelihood, ratify the reactivation of the rules of the “stability pact”. Suspended since 2020 due to the health crisis, these should however return in a revised version, according to the project presented by the European Commission.

The dynamic was, until the health crisis, the hardening of neoliberal rules, in particular by providing the Commission with new instruments – treaty on stability, coordination and governance; so-called heightened surveillance directives “two-pack” And “six-pack” adopted in 2012 and 2013 – in defiance of the socio-economic impacts on populations. The last decade has shown how these rules, officially designed to limit macroeconomic imbalances within the European Union, could actually accentuate or even provoke them.

Also, without revolutionizing the architecture of the European budgetary straitjacket, the reform project which will be debated at the European Council, seems to present some relaxations to this dogma. Among other things, the Commission proposes deducting the debt interest burden and unemployment compensation expenditure from the calculation of deficits – which would widen the possibility of counter-cyclical budgetary responses in the event of an economic shock –, but also to strengthen the individualization of national trajectories by leaving more latitude to States committing to investment programs.

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Except that this would in no way alter the logic that has prevailed until now. As it stands, what the Commission is proposing simply amounts to changing a few parameters of the system in place: neither the mandatory rule of a 3% of gross domestic product (GDP) budget deficit, nor the arbitrary ceiling on public debt at 60 % of GDP are not dropped.

Strengthening budgetary police power

Moreover, the notion of “structural primary balance” – supposed to measure a country’s budget surplus or deficit independently of the economic situation – remains the element that steers the adjustment path, even though it is it is a statistical construction totally dependent on hypotheses, by nature fragile and different depending on the institutions, in terms of “potential growth”.

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In reality, these reform proposals will mainly result in a strengthening of the Commission’s budgetary policing power. In addition to the procedures for “excessive deficit” or for “excessive macroeconomic imbalance”, a battery of reinforced sanctions would come into force (reputational sanctions, financial sanctions and blocking of European structural funds) and which can be activated preventively, that is to say from the moment when a State would be considered likely to deviate from its stability trajectory. The national budgetary plans for 2024 are already expected by the Commission by the end of March.

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