There is still a lot of uncertainty surrounding economic recovery in the Union.
Private investment remains very sluggish, as was demonstrated by the repercussions of the rate cuts carried out by the ECB and the results of the TLTRO operation.
The recent quantitative easing operation will also need to demonstrate its effectiveness in this extremely skittish environment.
As a consequence, the situation also requires a change in budgetary policy so that, in particular, greater use is made of strategic public investment as a lever for European recovery.
Unfortunately, the new ESA 2010 accounting standards are significantly hindering the investment of many municipal and regional authorities within the Member States. This is essentially attributable to the lack of a means to capitalise the creation of wealth and the lack of a means to depreciate these investments over a period of several years. This situation clearly has implications for the development of the authorities concerned and, of course, for the speed of European recovery.
1. Does the Commission intend to evaluate the means of applying these standards and the impacts on the investments of the authorities concerned?
2. Does the Commission intend to look into the possibility of offsetting part of these investments in the calculation of the deficits and the debt?
Answer given by Ms Thyssen on behalf of the Commission
1. The statistical recording of investment (gross fixed capital formation) in the ESA 2010 has remained unchanged from previous ESAs and is fully consistent with worldwide national accounts standards(1). The Commission sees no need to evaluate the application of these rules, which must be respected by all Member States and are important for comparisons at G20 level.
2. The ratios defined under the Stability and Growth Pact (SGP)(2) for EDP(3) deficit and debt are set for the general government as a whole. EU budgetary surveillance also takes place only at this overall level, while Member States retain full sovereignty on how to allocate targets across government sub-sectors. This allows taking into account national specificities in allocating rights and responsibilities between the central and local authorities.
The Commission is fully aware of the importance of public investment and is resolute to use the flexibility available in the SGP to favour such investment, in full transparency, safeguarding the transparent recording in the general government accounts. The Commission’s Communication on making the best use of the flexibility within the existing rules of the SGP(4) clarifies the possibilities in this respect.
(1) System of National Accounts 2008. The same recording rules apply to all sectors of the economy. Gross fixed capital formation, as described in ESA 2010 paragraph 3.124, consists of ‘resident producers’ acquisitions, less disposals, of fixed assets during a given period…’.
(2) As established under Articles 121 and 126 of the Treaty on the Functioning of the European Union (TFEU).
(3) EDP is the Excessive Deficit Procedure.
(4) COM(2015)12 final of 13.1.2015.