EU Urged to Scrap Old Fiscal Rules and Avoid Damaging Austerity
- ‘Fiscal framework could emphasize more qualitative guidelines’
- OECD also makes suggestions for changes to ECB policy approach
This article is for subscribers only.
The European Union should scrap rules that could force countries to hit strict budget targets even while their economies haven’t fully recovered from the pandemic, according to the Organization for Economic Cooperation and Development.
As the bloc’s finance chiefs start to debate the issue, the Paris-based OECD recommended adapting the EU’s long-contentious fiscal framework, saying it needs less complex targets, more focus on the long-term, and flexibility for individual countries as needed. That would help prevent a repeat of errors in the aftermath of the 2008 financial crisis, when governments were forced into damaging austerity, hampering already-weak economies.