PARIS (Reuters), -France, Italy and Spain called for more flexibility in the European Union’s fiscal rules. This would allow for more investments to help the bloc of 27 nations become more green and self-sufficient after a pandemic.

The EU’s budget rules protect the currency by limiting government debt and deficits. They have become more complex since they were established. The EU now considers how to modify them to be better suited to new economic realities.

There are two main issues: how to reduce government debt, which has risen during the COVID-19 epidemic without stifling economic growth; and how to encourage massive investment to combat climate change.

“There’s no question that we have to reduce our level of indebtedness,” Mario Draghi, Prime Minister Italy and Emmanuel Macron stated in a joint piece in The Financial Times.

The authors stated, “But we can’t expect to achieve this by higher taxes or unsustainable reductions in social spending. We also cannot choke growth with unviable fiscal adjustment.”

These leaders stated that the strategy they had was to cut recurrent spending by implementing “sensible structural reforms” and that EU fiscal rules shouldn’t prevent them making investments.

EU fiscal rules are not designed to give special treatment to investments now. France, Spain and Portugal proposed in September to exclude “green” and money used to digitalize the economy from EU deficit calculations.

Some EU nations in northern Europe disagree and are concerned that it might be complicated to identify what investment is needed to combat climate change.

France said that the EU needs to better safeguard its economic sovereignty. They should also move some of their key products to Europe. COVID-19 Lockdowns have shown disruptions in China’s supply chain, from which much of Europe’s pharmaceuticals are sourced. This can prove devastating.

Macron and Draghi stated in their op-ed that we need more freedom and key spending to secure our sovereignty.

The authors wrote, “Debt to finance these investments is undeniably beneficial to the welfare of future generations, long-term growth and should be supported by fiscal rules, since public spending of such kind actually contributes towards debt sustainability over time.”