Brussels – In a clear message to two of the euro‑zone’s biggest economies, the European Commission said it will not grant additional leeway on fiscal rules despite soaring energy costs and inflation pressures. At a news conference on Thursday, European Economic Commissioner Valdis Dombrovskis emphasized that the fiscal framework must remain stable and credible.
Italy’s request
Prime Minister Giorgia Meloni asked the Commission to adjust the calculation of permissible budget deficits to reflect higher‑than‑expected inflation. Rome also argued that member states should be allowed to use extra tax revenues generated by inflation to offset rising energy bills for households and businesses.
Greece’s request
Prime Minister Kyriakos Mitsotakis sought an exemption for temporary national support measures aimed at households and firms, asking that these be excluded from the EU’s maximum net‑expenditure limit.
Commission’s response
Commissioner Dombrovskis replied that upward inflation pressures are already taken into account when the Commission assesses compliance with fiscal rules. “We cannot come with new fiscal flexibilities all the time,” he said, warning that frequent rule changes could undermine the collective resolve to uphold a rules‑based fiscal framework.
He added that the credibility of the EU’s commitment to fiscal sustainability is a vital asset, especially at a time when confidence in the euro‑zone’s economic stability is paramount.
Existing leeway
The Commission noted that it has previously granted member states temporary flexibility to accommodate higher defence spending and measures aimed at reducing reliance on fossil fuels. Those adjustments were made within a structured, time‑limited framework, and the Commission stressed that any new requests must be evaluated against the same rigorous standards.
Implications for member states
Both Italy and Greece face significant budgetary pressures as energy prices remain elevated. Their appeals reflect a broader debate within the euro‑zone about how to balance short‑term relief for citizens with long‑term fiscal discipline. While the Commission’s refusal may limit immediate fiscal options, it also signals a commitment to maintaining a stable fiscal environment that investors and markets rely on.
Analysts note that the Commission’s stance could encourage member states to seek alternative ways to support households, such as targeted subsidies funded through existing budget lines, rather than expanding overall spending.
Looking ahead
The discussion is likely to continue as other euro‑zone countries monitor the outcome. The Commission has indicated that it will keep reviewing the fiscal framework, but any future adjustments will be made cautiously and within the established rules‑based system.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
