Fiscal Policy revised

»It will be vital to avoid making the mistakes of the past. In the fiscal consolidations of 10 years ago, investment was the first victim«

Paolo Gentiloni, Commissioner Economy

The COVID-19 pandemic presents not only unprecedented policy challenges, tied to a looming recession of an estimated 8,3% EU GDP decline, but also a window of opportunity for urgently needed fiscal reforms. As monetary policy has reached its limits, due to historically low interest rates over the last decade, there is a revival of fiscal policy in order to deal with the consequences of the economic crisis and the resulting short-term financing needs of almost €2 trillion, including a basic investment gap of €846 billion.

The Policy Lab will be focused on two core topics that shall be complemented by other issues raised during the discussions:

Fiscal rules
Tax exemptions

Policy Lab Objectives

The policy lab „Fiscal Policies Revised“ takes the recent recovery programs as a working base to

Discuss long-term implications of the COVID-19 crisis for managing public debt and fiscal policy
Develop ideas to align fiscal rules and fiscal policy with the EUs climate and environmental targets

Guiding Questions

How can economic policy in the EU better reflect the long-term fiscal risks of climate change and biodiversity loss and create fiscal space for preventive investments in the short term?
How can member states create fiscal revenues from reconsidering taxation and tax exemptions?

Relevant EU processes

Next Generation EU

A new recovery instrument of €750 billion which will boost the EU budget with new financing raised on the financial markets for 2021-2024

EU Economic Governance Review

The new political cycle as an opportune and appropriate moment to assess the effectiveness of the current framework for economic and fiscal surveillance, especially the six-pack and two-pack reforms.