EU treaty draft spells out escape clause

BRUSSELS – A new EU fiscal treaty will only allow eurozone countries to incur budget deficits during severe economic downturns in the eurozone or other exceptional events, according to a draft of the document obtained by Reuters yesterday.

The document is the latest draft of a treaty to tighten fiscal controls in the eurozone, a move Germany has insisted upon to prevent a repeat of the runaway spending that led to a debt crisis in the 17-country eurozone.In the latest draft, officials spell out more clearly when the eurozone would tolerate a deviation from a budget in balance or in surplus – called the medium-term objective: ‘Temporary deviation from the medium-term objective will only be allowed in cases of [an] unusual event outside the control of the contracting party with a major impact on the financial position of the general government or in periods of severe economic downturn for the euro area, the EU or the concerned contracting party.’The balanced-budget rule, which demands governments balance their budgets over the economic cycle, is central to the new treaty.- Nampa-Reuters

In an age of information overload, Sunrise is The Namibian’s morning briefing, delivered at 6h00 from Monday to Friday. It offers a curated rundown of the most important stories from the past 24 hours – occasionally with a light, witty touch. It’s an essential way to stay informed. Subscribe and join our newsletter community.

The Namibian uses AI tools to assist with improved quality, accuracy and efficiency, while maintaining editorial oversight and journalistic integrity.