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Europe's New Fiscal Rules

  • Sebastian Barnes
  • David Davidsson
  • Łukasz Rawdanowicz
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    Europe is putting in place a new system of fiscal rules following the euro area sovereign debt crisis and decades of rising government to debt-to-GDP ratios. These include the so-called “six pack” to upgrade the Stability and Growth Pact to a new Treaty incorporating the “fiscal compact”. Much of the discussion about the new rules has been procedural or theoretical. This paper shows what the rules will mean in practice under a realistic mediumterm scenario developed by the OECD. In the short term, fiscal consolidation will largely be driven by the current wave of Excessive Deficit Procedures. Only once these commitments are fulfilled will the new system of rules come into action. Although the rules are complex, the central pillar of the new fiscal rules will be the requirement to balance budgets in structural terms. These imply a tight fiscal stance over the coming years for many European countries by comparison with the performance achieved in past decades: almost all countries will have to be as disciplined as the few countries that managed to make meaningful progress in tackling high debt levels in the past. A further tightening of budgetary Medium-Term Objectives is likely in 2012, which will in many cases make the required fiscal stance even tighter. Over the very long term, the rules imply very low levels of debt. The requirements can thus not be considered to be a permanent approach. The methodology to calculate the structural balance has a number of weaknesses and discretion will be needed in implementing the rules. Les nouvelles règles budgétaires européennes En réaction à la crise de la dette souveraine de la zone euro et après des décennies de progression du taux d’endettement public par rapport au PIB, l’UE met en place un nouvel ensemble de règles budgétaires. Parmi ces nouvelles règles figure le train de six mesures (« six pack ») destinées à faire évoluer le Pacte de Stabilité et de Croissance vers un nouveau Traité intégrant le « Pacte budgétaire ». Le débat sur ces nouvelles règles a essentiellement porté sur des questions procédurales ou théoriques. Ce document montre ce qu’impliquent concrètement ces nouvelles règles, dans le cadre d’un scénario de moyen terme réaliste élaboré par l’OCDE. Dans un premier temps, l’assainissement budgétaire sera essentiellement motivé par la vague actuelle de procédures pour déficits excessifs. Ce n’est qu’à l’issue de ces procédures que les nouvelles règles entreront en vigueur. Le point d’ancrage de ces règles complexes réside dans l’exigence d’un équilibre budgétaire structurel. Bon nombre de pays européens devront donc, au cours des prochaines années, adopter une politique budgétaire plus rigoureuse que lors des décennies précédentes : la quasi-totalité des pays devront se montrer aussi disciplinés que ceux, peu nombreux, ayant réussi par le passé à réduire significativement leur dette publique. Un nouveau durcissement des objectifs budgétaires à moyen terme est probable en 2012, ce qui dans de nombreux cas donnera lieu à des politiques budgétaires encore plus rigoureuses. À très long terme, les règles impliquent un très faible niveau d’endettement. Les conditions imposées ne pourront donc pas être considérées comme permanentes. La méthodologie mise en oeuvre pour calculer le solde structurel présente certaines faiblesses et il faudra faire preuve de discernement dans la mise en oeuvre des règles budgétaires.

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    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 972.

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    Date of creation: 21 Jun 2012
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    Handle: RePEc:oec:ecoaaa:972-en
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