The EU’s long-term fiscal challenges
The Sound of Economics
The Importance of Fiscal Adjustment in the EU
Even in the most highly indebted countries like Greece and Italy, substantial fiscal adjustment is needed even beyond what these countries already planned. In terms of numbers, we need to have about 2.5% of GDP permanent primary surplus in order to reduce that at least 1% per year in each year over the next three decades. But there are a couple of butts. We are not sure whether current pressing spending priorities, especially on climate and defense, are properly included in the baseline government projections for public expenditures.
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