As plans are unveiled for overhauling EU fiscal rules, the co-presidents of the Left in the European Parliament have denounced the European Commission’s continuation of the Stability & Growth Pact (SGP) as “absurd”.

One of the main drivers of austerity, the SGP handicapped member state governments’ fiscal powers by restricting budget deficits to below 3% of GDP* and public debt below 60% of GDP.

“In order to meet the challenges posed by climate change, digitalisation and growing social inequality, Europe needs a massive and coordinated public investment effort that can realise the systematic transformation of our economy that we so urgently need,” said GUE/NGL co-president Martin Schirdewan (DIE LINKE, Germany).

“But to maintain the failed Stability and Growth Pact is to fail before we have even begun. Continuing to put arbitrary restrictions on the borrowing and spending abilities of EU governments is nothing short of absurd,” he argued.

Today’s announcement coincides with Schirdewan launching his own report to counter the Commission proposals. Entitled ‘Discipline and Punish: End of the Road for the EU’s Stability and Growth Pact’, the German MEP says we are long overdue a radical transformation of our economies and society.

“The EU’s SGP has enabled the Commission’s aggressive attacks on wages, workers’ rights, increasing the pension age, and privatising public services. I therefore welcome the public debate about the future of the SGP. In the study I am launching today, we have included proposals from various quarters for exemptions from the rules for green investment and for public investment.”

“However, progressives need to be more ambitious than simply asking for the austerity shackles to be loosened. They must be cast off,” he concluded.

Commenting on the failed fiscal policy mechanisms, including the ‘European semester’ system, GUE/NGL co-president Manon Aubry (France Insoumise, France) had this to say on today’s Commission announcement:

“The semester failed to address the need for economic convergence in the EU: the convergence criteria are absurd, and it was never fully respected by all member states.”

“Even worse was the Commission’s use of the arbitrary and highly-politicised mechanism for pursuing structural reforms that were never liked by EU citizens.”

“And now, the Commission wants a ‘greener’ European semester that integrates the Sustainable Development Goals. However, austerity cannot be green nor social! We need massive public investment to tackle the climate and inequalities crises, and this can’t happen if we keep a ceiling on public spending.”

“If we want to bring EU citizens and the EU together, and avoid another member state departure, European economic governance should not only be green and social but more importantly, democratic,” she concluded.

* The monetary value of all finished goods and services made within a country during a specific period