EU fiscal reform will be modest at best
Tuesday, September 14, 2021
Significance
Member states will start to negotiate possible reform of the fiscal rules in October, aiming for agreement by March. The outcome will be vital for spending and tax policy across the euro-area over the coming years.
Impacts
- Pressure will grow on hawkish member states to exempt areas relating to the green and digital transitions from strict spending rules.
- Premature fiscal tightening would likely result in political instability in Spain and Italy.
- Soaring prices could trigger social unrest and put pressure on governments to cut certain taxes.