Finances - EU countries agree on principles for new debt rules
The finance ministers of the EU member states have agreed on plans to reform the European debt rules. Among other things, they provide for the individual situation of each country to be taken into account more than before, as several diplomats told the German Press Agency after a video conference of the finance ministers on Wednesday. The plans still have to be approved 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 (FDP) on the X platform (formerly Twitter) on Wednesday. "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.
Le Maire: Excellent news for Europe
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 (formerly Twitter) 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.
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, the EU member states have managed to agree on principles for reforming the debt rules, considering each country's individual situation more than before, as revealed by several diplomats to the German Press Agency following a video conference.
- Christian Linder, the Federal Finance Minister of Germany's FDP party, celebrated the new fiscal rules for EU countries on his X platform account, highlighting their combination of deficit and debt reduction targets with investment incentives and structural reforms.
- The agreement was preceded by a Franco-German proposal, with Linder and French Finance Minister Bruno Le Maire finding common ground on Tuesday evening, marking a significant step towards unity in the EU's economic heavyweights.
- Le Maire expressed his satisfaction with the news on X, emphasizing the positive impact of the new rules on Europe's public finances and future investment.
- Controversies arose among the EU's capitals regarding the proposal, with Germany favoring strict and uniform minimum requirements, while France advocated for country-specific flexibilities due to the impact of the coronavirus crisis and the war in Ukraine.
- According to the current rules, debt should not exceed 60% of economic output, and budget deficits should remain below 3% of GDP. However, temporary suspensions until 2024 have been implemented due to the crisis, with concerns arising about a return to the old rules posing a threat to Europe's economic recovery.7.дипломаты EU, телеграфы Германии сообщили, что предложение было одобрено всеми 27 странами, и теперь оно должно быть утверждено правительствами и переговорщиками парламента.
Source: www.stern.de
