Brussels has dedicated two years to negotiating reforms aimed at increasing investment while simultaneously controlling member states' debt. Previous budgetary regulations were suspended due to the COVID-19 pandemic and the conflict in Ukraine.

European Union lawmakers gave their approval on Tuesday to a reform of the bloc's budgetary rules, with the aim of controlling spending. Brussels has dedicated two years to negotiating this reform. However, the new rules still require endorsement from the bloc's 27 member states. Negotiators from these member states provisionally approved the reform in February following discussions with lawmakers.

The new rules outline that a state's debt cannot exceed 60% of GDP, and its public deficit must remain below 3%. Countries with debt surpassing 90% of GDP will need to decrease it by an average of 1% per year, and by 0.5% if it falls between 60 and 90%.

These regulations would impose constraints on the EU Commission's ability to initiate procedures against countries with excessive deficits if essential investments are in progress. Additionally, national expenditure on co-financing EU-funded programs will be excluded from spending calculations.

The reform also enables member states with excessive deficits or debt to initiate discussions with the Commission.

Previous budgetary regulations under the Stability and Growth Pact were suspended from 2020 to 2023 to assist EU member states in coping with the economic impacts of the COVID-19 pandemic and the conflict in Ukraine.

During the negotiations on the new budgetary rules, there was intense debate over the extent to which limits should be eased to provide greater flexibility for investment.

Paolo Gentiloni, the EU's economy commissioner, described the new rules as "more flexible, more growth-oriented, and more credible in their implementation." He characterized the reform as a "good compromise."

The regulations garnered support from the three largest groups in the European Parliament: the conservative European People's Party (EPP), the center-left S&D alliance, and the centrist Renew group.

Markus Ferber, an EPP lawmaker, stated, "This reform marks a fresh start and a return to fiscal responsibility. The new framework will be simpler, more predictable, and more pragmatic." However, he cautioned that the success of the new rules depends on their proper implementation by the Commission.

Margarida Marques of the S&D praised the reform for providing "more room for investment" and "flexibility," while also ensuring a "real" social dimension.

Left-wing groups have voiced criticism against the rules, contending that they serve as a mechanism to enforce austerity measures.

Philippe Lamberts, chairman of the Greens-European Free Alliance, labeled the reform as a "straitjacket" that will seize all essential fiscal resources needed to ensure a climate, social, and economic future in Europe.