EU executive aims for simpler fiscal rules, better enforcement

By Jan Strupczewski

BRUSSELS (Reuters) - The European Commission will present in coming weeks its proposal for a revision of the European Union's fiscal rules, aiming to make them simpler and better enforced, European Economic Commissioner Paolo Gentiloni said on Wednesday.

Speaking at a Bruegel think-tank conference, Gentiloni said the overall objective of the revised rules would be to keep government debt and economic growth sustainable.

"Simplification, stronger national ownership and better enforcement will be the defining features of an improved framework, with the overall objective of supporting debt sustainability and sustainable growth," he said.

He said that one way to achieve that would be for governments to prepare spending plans for several years ahead that would be consistent with a fall in public debt to prudent levels. Such plans could also include investment and reform commitments, similar to those used for the EU recovery fund.

Governments could also move towards a single expenditure indicator to gauge their performance, rather than use the multitude of indicators, often not directly observable and later revised, as now.

To make sure governments see EU fiscal rules as their own -- an issue called national ownership in EU jargon -- EU countries could get more leeway in setting fiscal plans as long as they stick to common EU principles, like debt sustainability.

Gentiloni said countries that make reform and investment commitments could get more time to reduce deficit and debt so that fiscal sustainability and growth are mutually reinforcing.

This option already exists in the current rules, but several EU countries, notably Italy, have been pushing to expand it.

Gentiloni said there would be stronger enforcement of the rules as well -- something Germany has been keen on.

"For example, reputational sanctions in case of breach of national plans, as well as credible, debt-based excessive deficit procedures. The EU enforcement should be a function of the gravity of the fiscal situation," Gentiloni said.

(Reporting by Jan Strupczewski)