Germany and France agree on EU debt rules

Finances - Germany and France agree on EU debt rules

Germany and France have agreed on a joint proposal in the debate on the reform of EU debt rules. As the German Press Agency learned in the evening, this is to be presented to an extraordinary meeting of EU finance ministers on Wednesday.

According to information from government circles, the proposal contains 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.

The EU finance ministers have been struggling for months over new regulations for debt reduction. The negotiations are based on a proposal by the European Commission from April, which envisages individual approaches for each country instead of uniform requirements for debt reduction.

Neighboring countries come closer together

EU economic heavyweights Germany and France entered the negotiations with very different positions. Berlin insisted on uniform requirements for debt and deficit reduction in highly indebted countries - something Paris rejected for a long time. In the end, however, the neighboring countries came closer together.

"Two years ago, the positions were far apart. At the time, there were calls for the familiar criteria of a three percent budget deficit and a maximum of 60 percent national debt to be tightened. We have left that behind us together," Finance Minister Christian Lindner (FDP) told 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 are proposing financial incentives for member states that initiate structural reforms. However, it is important for credibility with the capital markets that there continues to be a formal procedure for excessive deficits above three percent," said Lindner. Together with his French colleague Bruno Le Maire, he intends to campaign for an agreement between the EU finance ministers on Wednesday. According to reports, Italy in particular must be won over to this.

Surprise visit to Paris

Lindner made a surprise visit to Paris on Tuesday. He wanted to clarify the points of contention between the two countries with Le Maire. Le Maire wrote on X (formerly Twitter) in the evening of excellent news for Europe, which guaranteed healthy public finances and investment in the future.

European rules currently stipulate that debt must be limited to a maximum of 60 percent of economic output and budget deficits must be kept below three percent of the respective gross domestic product. Due to the coronavirus crisis and the consequences of the Russian attack on Ukraine, they have been temporarily suspended until 2024.