The paper makes many great points that go beyond this quick comparison of gross deficits. All code for replication of the above exercise is available on my GitHub github.com/lennardwelsl... 5/5

EU rules are forward looking, requiring more adjustment in their initial application. I estimate EU SPB targets below zero by 2035, while they remain close to 0.9% under the debt brake. Over 11 years (7+4 year adjustment), the difference could average 0.8 pp and total more than 450 bn EUR. 4/5

The debt brake's structural deficit cap, would imply SPBs between 0.75% and 0.9% of GDP (without gradual adjustment). For a 4-year adjustment, the avg. permitted annual structural deficit would be 0.47 pp (21 bn EUR) lower than under EU rules. For a 7-year adjustment 0.7 pp (34 bn EUR) lower. 3/5

Based on latest EU Commission and financial market projections, I find that Germany could face a binding debt safeguard and a 2028 target for its structural primary balance (SPB) around 0.75% of GDP. With a 3-year extension the target would be only 0.56%. 2/5

David Pinkus at Bruegel, he’s not on here unfortunately www.david-pinkus.com

For a detailed look at the methodology, see Annex 2 of our original working paper
www.bruegel.org/working-pape...

Code, public data, and a short tutorial for replication of our simulations are available on my GitHub github.com/lennardwelsl...

4) The Council’s proposal weakens the role of national independent fiscal institutions (IFIs) by stating governments "may request" an assessment, as opposed to mandating it like the Commission’s proposal did.

3) Council-endorsed climate-investments should have been excluded from the safeguards (while remaining in the DSA). Instead, only 2025-26 RRP projects are excluded. This puts investments that are instrumental to the green transition at risk without improving debt sustainability.

2) The compromise on the excessive deficit procedure (EDP) doesn't go far enough: Min. adjustment steps of 0.5% of GDP exclude interest payments only until 2027. Measuring the adjustment in primary instead of in structural primary terms makes little sense (t.co/HirR2TkUcK).

The Bad (4 points):

1) The new "deficit resilience safeguard" requires continues fiscal adjustment until a structural deficits are below 1.5%. The minimum adjustment steps (0.25-0.4% of GDP p.a.) micromanage the adjustment process and for countries like Italy the 1.5% margin may proof too tough.

5) Requiring efforts beyond the current Recovery and Resilience Programme (RRP) to extend the adjustment period from 4 to 7 years will incentivize additional reforms and investments.

6) The independent European Fiscal Board has a meaningful role in monitoring the implementation of the new rules.

3) Requiring the DSA to be Council approved, published, and replicable will increase collective ownership.

4) The reformulation of the "debt safeguard" now prescribes debt reduction only after deficits have been brought below 3%, which is not ideal but more reasonable.

2) Preserving the net expenditure path as main target (ie ignoring interest payments and cyclical items) as well as general and national escape clauses will make the system less procyclical.

The Good (6 points):

1) Retaining country-specific fiscal adjustment based on the debt sustainability analysis (DSA) makes successful implementation more likely.