Commission: EU countries should focus on net expenditure, cut debt over 4 years

The European Commission proposed on Wednesday that, under a reform of the EU's fiscal rules, governments should ensure public debt falls over four years and stays on a downward path for a decade afterwards.

The proposal, which sets no numerical target for how much the debt should fall, is likely to disappoint the EU's biggest country Germany, which wanted to set a 1% of GDP minimum annual debt reduction target for each of the EU's 27 countries.

The debt reduction would be the outcome of a four-year plan of reforms, investment and fiscal measures that would be agreed individually by the Commission and each government and target annual net expenditure as the key operational indicator.

Governments could get more time to reduce their debt and deficit levels, for instance seven years, if they implement reforms that increase fiscal sustainability, boost growth or...