Jean-Claude Juncker is considering excluding education and investment spending from the EU countries' budget deficit and debt calculations | Stephanie LeCoq/EPA Jean-Claude Juncker wants to bend European budget rules In his annual speech, the Commission president is expected to call for more flexibility in budget deficit calculations.

Jean-Claude Juncker will push for changes to the Stability and Growth Pact in his State of the Union speech next week by calling for more flexibility when assessing the deficit and debt of EU countries, according to two senior Commission officials familiar with the discussions.

The European Commission president told a gathering of 27 commissioners in the Belgian resort town of Knokke last week that he was considering calling for the exclusion of education and investment spending from the EU countries' budget deficit and debt calculations.

Although he hasn't settled on what he will suggest during his annual speech in Strasbourg next week, the mere possibility of offering flexibility was "vehemently" opposed by Valdis Dombrovskis, the Commission's vice president for the euro and financial services. But Juncker's proposal was welcomed by Economic and Financial Affairs, and Taxation Commissioner Pierre Moscovici and Employment, Social Affairs, Skills and Labor Mobility Commissioner Marianne Thyssen.

"There was a discussion generally on the politics," said a senior Commission official. "Dombrovskis said he wants to defend the rules as they exist, but Thyssen said it’s time for them to reevaluate."

A Commission spokesperson declined to comment on the discussion, saying Juncker is personally writing his speech and nobody can claim to know its contents.

French President François Hollande and Italian Prime Minister Matteo Renzi have been pushing for more leniency on calculating deficits. The stability pact requires that EU countries limit their budget deficit to 3 percent of GDP and public debt to 60 percent of GDP.

These figures are enshrined in the Lisbon treaty. While sources said Juncker has no intention of calling for a treaty change, he's pushing for the "stretching of flexibility."

In May, Juncker caused outrage when he suggested that the Commission gave France special treatment by granting two additional years to bring down its deficit to 3 percent, telling the French Senate television that this was allowed "because it is France." Italy was also granted maximum leeway this year on its debt. The country's deficit is currently under 3 percent, but the level is still high so it has been told to continue with the reduction.

"Italy is supportive of proposals to encourage both structural reforms and investment," said Roberto Basso, spokesperson for the Italian Ministry of Economy and Finance. "There are several proposals on further flexibility to encourage investments coming from different member states."

In July, the Commission also decided that Spain and Portugal should not be fined for failing to take “effective action” to correct their budget deficits.

The idea of excluding certain types of expenditure like education, research, and defense has been floated in the past. It's already a practice to exclude certain costs related to the refugee crisis or security situations, like a terrorist attack, and other expenses related to exceptional events. In January 2015, the Commission issued guidelines on how to make the best use of flexibility within the existing rules of the Stability and Growth Pact to encourage structural reforms and investment.

"I’m not sure he will try to go into details that will be criticized in one way or another" — Senior EU diplomat

The EU's Economic and Financial Affairs Council will discuss how to simplify the regime and to see if expenditure benchmarks can be made easier to calculate at a meeting in Bratislava on Friday and Saturday. Those talks are expected to conclude at the end of 2016, according to an official involved in the negotiations.



A senior EU diplomat cautioned that Juncker will not likely make a breakthrough on the issue during his speech.

"He’ll want to flag it because it’s politically important, saying we will have to come back to the stability pact," the diplomat said. "I’m not sure he will try to go into details that will be criticized in one way or another."



Another senior Commission official cautioned: "We’ve always been skeptical about the idea of excluding whole categories of expenditures from the calculations."