Today, MEPs approved a new set of austerian fiscal rules — imposing an estimated €100 billion in cuts, which will hit working-class people hardest.

Under the disguise of a reform, European Conservatives, Liberals and Socialists pave the way for the ruthless return to austerity. Left MEP José Gusmão (Portugal) says: “These new reforms are simply repackaged austerity. We need more public investment in public services, housing, infrastructure, and the climate transition, not more Austerity! These rules will put a straitjacket on countries’ capacity to invest in what is needed for boosting social convergence and the green transition. The Left voted against this revision, and we’ll keep fighting for a more Social and Green Europe!”

The Commission will present a reference trajectory for its net primary expenditure for countries exceeding the 3% deficit and 60 % government debt rules. Governments must then use it to create a national four—to seven-year plan describing the reforms and investments that would guarantee a similar trajectory. If the Council disagrees with the proposal of the member state, the Commission’s plan will be imposed.

The idea is straightforward: fiscal adjustment can only be achieved through blind cuts in public spending, with elected governments losing their sovereignty. It’s another attack on the working class, which would be faced with job cuts, lower salaries, worse working conditions, and further underfunding of public services.

Through the negotiations, the Council pushed for more severe safeguards and further restricted member states’ ability to invest. In addition to a numerical benchmark for an annual reduction in government debt, member states will need to create a safety margin below the Treaty Deficit reference value of 3% of GDP. This means going further than the Treaty’s straitjacket.

It will be easier to open the Excessive Deficit Procedure, which ultimately imposes sanctions on Member States. Throughout the seven years, countries cannot deviate from the initial agreement on their public spending. This surveillance is done through the control account, which becomes binding with narrow numerical benchmarks. Even a proposal introduced by the European Parliament to suspend this mechanism for certain eligible public investments has now been deleted.

Only the increase of one type of public spending is singled out as a relevant factor not to open an Excessive Deficit Procedure: expenditure on military equipment. This way, austerity will reinforce the ongoing militarisation of Europe’s economy and society.

The return of austerity is the exact opposite of what is required. Under plans for new economic governance rules, the majority of EU member states will not be able to meet their targets for investment in schools, hospitals, and housing. More precisely, 18 member states, including Germany, France, Italy, Spain, and Poland, cannot make the investments needed to bridge that gap.

The European Commission’s own figures show that investment in Europe’s social infrastructure to meet citizens’ needs falls short by €192 billion per year. The Institute for Climate Economics also reports a €406 billion annual gap in green transition funding. With these new economic rules in force, member states will be compelled to make cuts to their government budgets instead of addressing these shortfalls.

The Stability and Growth Pact was a disaster for the people of the EU. It imposed years of prolonged economic hardship, stagnation, and cuts to the public sector across Europe, hampered individual member states’ capacity to care for those most in need. This pact has enshrined austerity and neoliberalism in the EU and belongs to the dustbin of history.