Pandemic sets stage for euro-area showdown over debt rules

“What was clear before the pandemic has become even more obvious now: the fiscal rules in Europe need a substantial overhaul,” said Christian Odendahl, chief economist of the Centre for European Reform.

“For now, we have to live with small steps,” said Odendahl. “If these small steps, such as a slower fiscal transition out of the pandemic to support the recovery, turn out to be economically useful without undermining debt sustainability, then the fiscal hawks may be more open to a broader rethink.”