Fiscal reforms agreed by EU governments

European Union finance ministers agreed on Wednesday on changes to the EU's fiscal rules updating them to the post-pandemic realities of high public debt and the need for massive public investment to fight climate change.

The pact is complex but is built on two crucial principles: an upper limit for a country's national budget deficit, and an upper limit for its total public debt.

The rules shift the focus from the annual deficit and debt to net primary expenditure every year - a fiscal indicator which measures those spending components under a government's direct control. The European Commission and the country concerned agree on a path for net primary expenditure for four years, to cut the debt and deficit to below the EU's limits of 3% and 60% of gross domestic product (GDP) respectively.

The four years to bring down public debt through control of government...