Germany and France at odds on EU debt rules

As of: 01/17/2022 9:49 p.m

At his first EU meeting, Federal Finance Minister Lindner emphasized the importance of European fiscal rules. His French colleague Le Maire, on the other hand, reiterated the call for an easing of debt policy.

The federal government is putting the brakes on the debate about a possible reform of the European debt rules, as demanded above all by France. Finance Minister Christian Lindner emphasized the importance of fiscal rules at the meeting of finance ministers of the Eurogroup in Brussels. These are “crucial in order to maintain the credibility of the states in relation to the capital markets,” said the FDP politician. The EU requirements made an important contribution to allowing prices to develop in a controlled manner.

Lindner said that in his eyes, the Stability and Growth Pact, in which these rules are anchored, has proven its flexibility during the Corona crisis. It is now time to build up budgetary reserves again. “That’s why I’m very much in favor of reducing national debt.”

He does not expect that “fundamental changes can realistically be expected” in the criteria of the deficit rules, said the minister. But they are not necessary either, “because there are other measures that can be taken to combine fiscal stability with improved investment opportunities.”

France insists on easing

His French colleague Bruno Le Maire, on the other hand, reiterated his call for an easing of debt policy. In a previous interview, he had described the strict requirements for the debt of the member states as “outdated”. At the meeting with his colleagues, Le Maire insisted on focusing on growth. “Growth comes before stability,” he said. “We need a pact, we need common rules, but first and foremost it has to be a growth pact.”

Lindner explained that they wanted to look at the proposals of other countries. “However, the rules of the Stability and Growth Pact are also well known and reliable for the citizens,” said the FDP politician.

Pact suspended until the end of the year

The EU’s Stability and Growth Pact stipulates that countries should not borrow more than 60 percent of their economic output. Budget deficits are to be capped at three percent of gross domestic product (GDP). The pact was suspended during the Corona crisis, but is scheduled to come into force again in 2023. Critics, especially in southern Europe, complain that the debt rules stand in the way of investments in climate protection, for example.

According to the Commission, the debt ratio of the EU is now around 92 percent. However, there are big differences: Italy, for example, has borrowed around 155 percent of GDP, the Netherlands only around 57 percent. Highly indebted countries fear that a quick return to the strict guidelines could damage the recovery.

Christian Lindner’s first appearance in Brussels: The dispute over the debt rules

Holger Beckmann, ARD Brussels, 17.1.2022 11:09 p.m

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