EU countries agree on new debt rules
The finance ministers of the EU member states agree on a reform of the European debt rules. The individual situations of the countries are to be given greater consideration than before. The Spanish EU Council Presidency announced that the agreement would ensure "stability and growth".
After a long struggle, the finance ministers of the European Union have agreed on a reform of the common debt rules. This was announced by the Spanish EU Council Presidency on X. The agreement would ensure "stability and growth". Among other things, the reform will take greater account of the individual situation of each country, as several diplomats said after a video conference of the finance ministers. The plans still have to be adopted by the countries and negotiated with parliament.
The new fiscal rules for the EU member states are both more realistic and more effective, wrote Federal Finance Minister Christian Linder from the FDP on X. "They combine clear figures for lower deficits and falling debt ratios with incentives for investment and structural reforms." Stability policy has been strengthened.
The agreement between the 27 countries was preceded by a Franco-German proposal, which Lindner and his counterpart Bruno Le Maire had agreed on Tuesday evening. The two economic heavyweights of the EU in particular were at loggerheads for a long time in the debate. An agreement between all 27 countries without an understanding between Paris and Berlin was considered almost impossible.
Months of wrangling
According to information from German government circles, the proposal from the neighboring countries included more effective safety lines for reducing budget deficits and national debt than before. At the same time, investments and structural reforms of the member states should be better taken into account. On Tuesday evening, Le Maire wrote on X of excellent news for Europe, guaranteeing healthy public finances and investment in the future.
Europe's finance ministers struggled for months to reach a compromise on a reform of the so-called Stability and Growth Pact. The basis for this was a proposal made by the European Commission in April. It provides for highly indebted countries to be granted more flexibility in reducing debt and budget deficits due to the consequences of the coronavirus crisis and the war in Ukraine.
The proposals were controversial in the capitals. The German government, for example, called for strict and uniform minimum requirements. France, on the other hand, the second largest economy in the EU after Germany, had clearly spoken out against uniform rules.
Countries still have to agree
The current rules stipulate that debt must not exceed 60 percent of economic output and that budget deficits must be kept below 3 percent of gross domestic product. Due to the coronavirus crisis and the consequences of the Russian attack on Ukraine, they have been temporarily suspended until 2024. Until now, countries have normally had to repay five percent of debts above the 60 percent mark each year. A return to the old rules is seen as a threat to Europe's economic recovery. In addition, the rules were often disregarded even before the pandemic - including by Germany.
Before the new rules can come into force, they still have to be adopted by the countries and negotiated with the European Parliament. Legislation is expected to be finalized before the European Parliament elections. The European elections will take place at the beginning of June 2024.
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Despite the ongoing debate, Christian Lindner, the German finance minister, welcomes the reform as a step towards more realistic and effective debt rules within the EU. The new rules aim to strike a balance between fiscal discipline and investment, enhancing stability policy. However, the agreement needs to be ratified by the countries and the European Parliament for it to take effect.
Following the EU-wide agreement, EU Commissioner Paolo Gentiloni stated that Christian Lindner played a crucial role in reaching a compromise, acknowledging his contribution during the prolonged dispute over the debt rules.
Source: www.ntv.de
