1.7 Euro stability criteria

1.7 Euro stability criteria

In the autumn of 2018, the EU Commission and Italy had a bitter dispute over the draft budget for 2019. A solution seemed impossible at first, as Italy wanted to breach its obligations under the Fiscal Pact once again. Then French President Macron came to the aid of the Italians. When Macron folded against the Yellow Vest movement and planned to increase its debt, the EU Commission also gave in and accepted a new Italian debt of 2.04% of GDP. However, this was based on the autumn growth forecast, which was still at 1.2%.

Chart 8: Stability criterion, 3% new debt
Chart 9: Growth forecast of the EU Commission for 2019

Based on the current forecast of 0.2%, Italy's new debt will exceed 3%. The European debt rules are observed by only a few countries. Without the ECB's zero interest rate policy, Italy's debt would be out of control anyway. The burden of this policy is borne by savers, who are systematically expropriated.

Chart 10: Stability criterion 60% debt situation

Although in 2018, for the first time in years, no States breached the 3% debt criterion of the Maastricht Treaty (see Chart 10), they have breached the criteria agreed in 2011 in the course of the introduction of the ESM (see The EU "six-pack"). In view of the evident clouding of the economic forecasts, there will probably not only be breaches of the current rules of the Stability and Growth Pact in 2019, but also of the original 3% clause. Some States have never complied with the rules regarding the absolute figures for national debt.


List of references for the used photo and charts: