EU countries agree on new debt rules
Europe’s finance ministers have been negotiating for months to reach a compromise on a reform of the so-called Stability and Growth Pact – and they have now agreed on common debt rules. German finance minister Lindner expresses satisfaction.
The finance ministers of the European Union have reached an agreement on a reform of the common debt rules. Highly indebted EU countries will thus have more time to reduce their deficits and gain additional flexibility for investments. In recent years, debt levels have skyrocketed due to the coronavirus pandemic and the fight against high energy prices in the wake of the Russian attack on Ukraine. Europe’s finance ministers have been struggling for months to reach a compromise on a reform of the so-called Stability and Growth Pact. The basis was a proposal by the European Commission from April. The plans still need to be accepted by the countries and negotiated with the parliament in order to come into effect.
Prior agreement between Germany and France
According to the new rules, EU countries with excessive debt must, on average, adhere to a minimum level of deficit and debt reduction annually. This was a pressing demand, especially from Germany. Overall, however, the framework is less strict and rigid than before. This was insisted upon by France, the second largest economy in the EU after Germany, and many southern European countries. The agreement of the 27 countries followed a German-French proposal, which Lindner and his French counterpart Bruno Le Maire agreed on Tuesday evening. The debate had long been a standoff, particularly between the two strongest economies. An agreement of all 27 countries without a understanding between Paris and Berlin was considered almost impossible.
Lindner expresses satisfaction
The new fiscal rules for EU member states are more realistic and effective at the same time, wrote German Finance Minister Christian Lindner (FDP) on the X platform. “They combine clear figures for lower deficits and declining debt ratios with incentives for investments and structural reforms.” Stability policy has been strengthened. His French counterpart Bruno Le Maire also wrote on X on Tuesday evening about excellent news for Europe, guaranteeing sound public finances and investments in the future.