France on Thursday (21 May) called on the EU to suspend its strict budgetary rules for member states for this year and next due to the severe hit economies have taken during the coronavirus pandemic.
“Nothing would be worse than to relaunch the economy while putting the brakes on public spending,” French Finance Minister Bruno Le Maire told Le Figaro newspaper.
“That’s the mistake we made in 2009,” he added, referring to the aftermath of the 2008 financial crisis.
“We hope that the stability pact rules will be suspended for 2020 and also for 2021,” Le Maire said.
Under European Union rules, member states cap their budget deficits at 3% of GDP, and maintain a debt-to-GDP ratio of no more than 60%.
Earlier this week European Central Bank head Christine Lagarde said that the coronavirus crisis would be a good occasion to modernise the EU’s Stability and Growth Pact, its core economic policy guidelines which set the budget rules.
The pact has effectively been suspended by the crisis, with Brussels agreeing to allow the 27 members to go way beyond such spending and borrowing limits as they try to get their economies going again.
“I think that the terms of the Stability and Growth Pact ought to be reviewed and simplified before it is put back in place when we have got out of this crisis,” Lagarde said on Monday.