Germany and France have agreed on a joint proposal in the debate about reforming EU debt rules. As the German Press Agency learned in the evening, this will be brought to an extraordinary meeting of the EU finance ministers on Wednesday.
According to government sources, the proposal includes more effective safety lines for reducing budget deficits and national debt than before. At the same time, investments and structural reforms by the member states should be better taken into account.
For months, EU finance ministers have been wrestling with new regulations for debt reduction. The basis for the negotiations is a proposal from the European Commission from April, which instead of providing uniform guidelines for debt reduction, provides individual paths for each country.
Neighboring countries are getting closer
The EU economic heavyweights Germany and France entered the negotiations with very different positions. Berlin insisted on uniform guidelines for debt and deficit reduction in highly indebted countries – which Paris rejected for a long time. Recently, however, the neighboring countries became closer.
“Two years ago, the positions were far apart. At that time there were demands to eliminate the well-known criteria of a three percent budget deficit and a maximum of 60 percent national debt. We left that behind us together,” said Finance Minister Christian Lindner (FDP) to the dpa. On the contrary, both criteria have now been expressly confirmed.
From a German perspective, it is also crucial that the path to sustainably stable public finances is based on clear numerical guidelines. “We propose financial incentives for the member states that initiate structural reforms. However, for credibility with the capital markets, it is important that there is still a formal procedure in the event of excessive deficits of over three percent,” said Lindner. Together with his French colleague Bruno Le Maire, he wants to campaign for an agreement between the EU finance ministers on Wednesday. According to reports, Italy in particular needs to be won over.
Surprise visit to Paris
Lindner made a surprise visit to Paris on Tuesday. With Le Maire he wanted to clarify the points that were still controversial between the two countries. Le Maire wrote on X (formerly Twitter) on the evening of excellent news for Europe, guaranteeing healthy public finances and investments in the future.
European rules currently stipulate that debt should be limited to a maximum of 60 percent of economic output and that budget deficits should be kept below three percent of the respective gross domestic product. Due to the Corona crisis and the consequences of the Russian attack on Ukraine, they are temporarily suspended until 2024.
