In the debate about a reform of the EU debt rules, France continues to oppose the uniform rules for all countries demanded by Germany, among others. “Our answer is clearly ‘no’, for reasons based on our past experience,” Finance Minister Bruno Le Maire said at a meeting of EU finance ministers in Luxembourg on Friday.

“If you tried, it didn’t work and led to catastrophic consequences for the European Union, which also have to do with political issues, namely respect for the sovereignty of States,” Le Maire said. “I remind you that the European Union is still built on the sovereignty of nations and states.”

Federal Finance Minister Christian Lindner, on the other hand, reiterated his call for uniform regulations: “We need common rules that are the same for everyone,” he said in Luxembourg. The fiscal rules should not “in principle become softer, but more realistic and reliable”. Another ten – mainly Eastern European – countries had sided with Germany in a guest article in “Welt” on Thursday and also called for “clear and understandable rules that apply equally to all member states”.

Rules suspended until 2024

A reform of the debt rules is currently being negotiated in the EU. The rules impose caps on states. In essence, they envisage limiting debt to a maximum of 60 percent of economic output and keeping budget deficits below 3 percent. Due to the Corona crisis and the consequences of the Russian attack on Ukraine, the rules in force up to now have been suspended until 2024. So far, states have normally had to repay five percent of debt that is above the 60 percent mark per year. For highly indebted countries such as Italy or Greece, this would be devastating for growth. Even before the pandemic, the rules were disregarded – also by Germany.

In the reform proposals for the so-called Stability and Growth Pact presented in mid-April, the EU Commission proposed giving highly indebted countries more flexibility in reducing debt and deficits. Instead of uniform guidelines for all countries, the authority relies on individual ways for each country to reduce debt and deficits in the long term.

From a German point of view, the proposals are not sufficient, Finance Minister Lindner calls for strict minimum requirements. For example, countries with high debt ratios should have to reduce them by at least one percentage point each year.