Economics
EU Needs Budget-Rule Overhaul To Return to Growth, Bruegel Says
- Spending rules should replace emphasis on structural balance
- Scrapping current system would be best but not practical
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The European Union might be able to grow faster by overhauling its budget rules to focus on spending instead of structural budget deficits, according to a study by the Brussels-based research group Bruegel.
Tightening at the wrong point in the economic cycle “might be one reason for the anemic economic recovery in Europe, raising questions about the effectiveness of the EU’s fiscal framework,” Gregory Claeys, Zsolt Darvas and Alvaro Leandro wrote in the Bruegel paper. “In practice, the implementation of the rules is hindered by badly-measured indicators and incorrect forecasts, which can lead to misleading policy recommendations.”