The EU's Green New Deal aims to make the 27-member EU climate-neutral by 2050, requiring annual investments of up to 1 trillion ($1.09 trillion). Current economic challenges, including security spending needs due to the Russian invasion of Ukraine, energy supply shortages, rising inflation, labor shortages, and slowing growth, pose obstacles to financing this ambitious initiative.
Eurozone members face limited fiscal space under strict rules, including maintaining national debt below 60% of annual GDP and government budget deficits under 3%. While these limits were temporarily lifted during COVID-19, they have been reinstated. Violations can incur penalties, although a recent reform allows for more negotiation between countries and the EU on restoring fiscal discipline.
Greek minister Kostis Hatzidaki described the negotiations around fiscal rules as a 'typical European, yet good compromise' at the Brussels Economic Forum. He emphasized the importance of fiscal prudence, warning against ignoring market demands, drawing on Greece's past experience of heavy indebtedness during the European sovereign debt crisis.
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