Autor: João Ricardo Catarino

Universidad de Lisboa

 

Autor: Pedro Borrego

Universidad de Lisboa

 

Autor: Susana Sobral

Universidad de Lisboa

 

Modalidad: Online

 

Abstract:

Financial sustainability constitutes a fundamental value of public action. Sustainable public finances provide increased security, giving states greater capacity to face crises. Understanding the evolution of public debt and budget deficits is essential to grasp their impact on stimulating the economy.

In this qualitative and quantitative study, we analyse the evolution of public debt and budget deficits in the 27 Member States of the European Union between 2018 and 2023, examining the behaviour of various Member States during this period. The selected period is significant for understanding the evolution of public debt and budget deficits and the effects caused by the temporary suspension, from 2020 to 2023, of European rules regarding Member States' deficit and public debt limits, established in the Stability and Growth Pact (SGP). We aim to characterise the behaviour of Eurozone Member States and non-Eurozone Member States, conducting a comparative analysis of these two groups. This analysis allowed us to understand the impacts of the temporary suspension of such rules on Eurozone Member States compared to non-Eurozone Member States. The data collected from Eurostat databases leads us to conclude that fiscal consolidation and long-term sustainability are fundamental principles incorporated into the national finance management of both groups of states. We also analysed the evolution of public spending between 2018 and 2022, trying to understand the contribution of health expenses to the evolution of other aggregates in each group studied.
We also conclude that greater freedom of action for both groups of Member States did not result in the abandonment of these rules nor in an apparent disregard for the adverse effects that high levels of deficit and debt have on the resilience of European Union Member States in the face of future crises.