Half europe is in infringement procedure. Something old and frankly stupid

The usual, boring ritual of opening the infringement procedure was staged today. special observation regime will be reserved for seven member states (Italy and France in the lead) for exceeding the 3% deficit/GDP and the debt/GDP rule of no more than 60%. A situation that affects more than half of the Eurozone countries but, in the case of France and Italy, takes on greater significance because of the size of their economies.

Until, by now this fall, the trajectory to be followed in the process of reducing net spending and the structural primary deficit is defined, the country under procedure will still have to make a minimum annual correction of 0.5 percentage points of GDP. Roughly 10 billion.

EU countries under infringement

These are old rules, only temporarily sent to the attic during the lockdown and now dusted off. It is only astonishing that after about 8 years of applying those rules, no one has the courage to demand that they remain in the attic, so unsuccessful was, by Commissioner Gentiloni’s own admission, all that dusty paraphernalia.

Instead, no. They continue. While in the U.S., they sail serenely with a deficit/GDP around 7 percent for the next few years as well. they were stupid, rigid rules before, and they are stupid, rigid rules now, and they will succeed in depressing European Economy. 

But this time is different than in 2011 and 2018. We are not in the front line of fire. In Paris Macron is in danger of being politically obliterated, and in Berlin, they are desperate for 40 billion in budget cuts that, if executed, will spell the end of Olaf Scholz’s government as well.

Do you want (suicidal) state budget discipline as if it were a delicatessen? Then start with France and Germany and let’s see how long their government last