A green fiscal pact

Past crises and consolidation episodes have resulted in major
public investment cuts. However, in order to meet the European
Union’s climate goals, the additional public investment needed is
between 0.5 percent and 1 percent of GDP annually during this
decade. How does the EU grapple with just how far-reaching the
economic implications of the green transition will be?



In a paper presented at the recent ECOFIN in September, Bruegel
Director Guntram Wolff and Senior fellow Zsolt Darvas advocate
for a ‘green golden rule’, that exempts net green public
investment from the debt and deficit rules of the Stability and
Growth Pact. They explain more in detail with Yuyun Zhan in
today’s episode.



Read more:


Darvas, Z. and G. Wolff (2021) ‘A green fiscal pact: climate
investment in times of budget consolidation’, Policy Contribution
18/2021, Bruegel