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Will Europe recede into macroeconomic instability with its proposed new fiscal rule?

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Given the disparate levels of debt and deficits across member states, the key question is whether it is fair to impose a universal austerity rule for all of EU

April 24, 2023 / 08:40 AM IST

Given the positive acceleration of GDP growth rates in 2022 it was considered time to reopen the discussion on fiscal rules.


A German non-paper has proposed debt reduction targets for EU nations, similar to that of post 2008 financial crisis
Countries have to reduce debt by cutting spending and raising taxes
Austerity measures adopted in aftermath of 2008 financial crisis led to deep recessions in some nations
In November 2022, the EC had proposed a flexible path to debt reduction 
Imposing a common fiscal rule on all EU nations could induce an unacceptable GDP contraction in countries that have low debt and high standards…

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