"Europe should learn the UK's fiscal lesson”. This is the title of the article written on Financial Times from the former Italian Prime Minister Mario Draghi, praising the choices of the Labour government led by Keir Starmer, especially regarding the “significant” increase in public investment.
Draghi: “Europe should learn from London”
The former president of the ECB suggested that Europe follow the example of the United Kingdom, praising the work done by Labour. “Europe can learn fiscal lessons from the UK on how to achieve its goals. The budget approved this week offers some interesting ideas,” Draghi wrote on Ft.
Going into the merits of the choices made by the Labour government, Draghi writes: “For example, London has chosen to significantly increase public investment over the next five years and has adopted precise rules to ensure that loans are used only to finance these investments,” he explained. “For ensure the quality of spending, transactions will be validated by independent authorities,” he added. “This increases the likelihood that public investment will have a positive net present value and thus support fiscal sustainability.”
Very different European budgets
The former prime minister stressed that the first budgets that EU countries are about to present under the new European fiscal rules have shown some differences in approach compared to the United Kingdom. “Most countries that have fiscal space and are not facing a serious deterioration in their macroeconomic outlook are opting for a Shortest consolidation path four years instead of seven”.
“It therefore seems unlikely that these governments will use the margins to increase investments provided for by the new rules", predicted the former head of the European Central Bank
“For those countries that want to avail themselves of the seven-year extension, the guarantee that the money will be well spent is up to the Commission. This requires that it is a demanding negotiating partner, which rigorously applies the investment objectives and assesses the quality of the investment and whether it addresses the common priorities of the European Union”, he concluded.
