Germany, France show divisions on EU budget rules
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The EU wants to simplify decades-old rules governing national budgets, and Germany and France choose opposing sides.
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Germany, France show divisions on EU budget rules.
Germany and France presented opposing visions for the future of the European economy on Monday, hinting at a fight later this year to overhaul the bloc's stringent rules on government spending.
The EU wants to simplify decades-old rules governing national budgets, and the positions taken by the eurozone's top two economies will shape the debate.
The rules require eurozone members to collaborate when developing their spending plans, an exercise that gained importance following the debt crisis of 2010-15, which nearly brought the single currency to its knees.
Christian Lindner, Berlin's new Finance Minister, was attending his first meeting with his eurozone counterparts and made it clear that his priority will be to keep spending under control.
Despite being a member of a newly formed coalition with the center-left and the greens, Lindner is a member of the liberal FDP, which has traditionally advocated for prudent spending and a zero-deficit policy.
"It is crucial that we continue to pay attention to the importance of the fiscal rules," Lindner said as he arrived for the talks.
"Fiscal rules are crucial to maintaining the credibility of governments vis-à-vis the capital markets."
The rules, known as the Stability and Growth Pact, limit a country's government debt to 60% of its annual GDP and its annual deficit to 3% of GDP.
Constructive spirit
France and Belgium have joined Italy, Spain, and Greece in having debt ratios of more than 100%, reflecting years of overspending.
The rules were suspended in response to the Covid-19 pandemic and are set to re-enter into force at the end of the year, hopefully with new benchmarks in place.
"I'm very much in favor of reducing sovereign debt and this is one of the important details," Lindner said.
However, French Finance Minister Bruno Le Maire insisted that the bloc's energy be directed toward growth, especially since Europe's recovery is lagging behind that of the United States.
"It must be a growth pact first. Growth comes before stability," Le Maire said, with France in favor of allowing the massive investments needed to green Europe's economy to be absolved from the rules.
Lindner told reporters that the discussion will not begin in earnest until June when the European Commission is expected to present its proposal to amend the rules.
The Commission's Executive Vice President, Valdis Dombrovskis, said it held no "pre-cooked ideas or predetermined positions," and the EU's executive would listen to member states in a "constructive spirit".
The debate will rage on until at least EU leaders meet in March for a summit dedicated to the subject.
