By Jan Strupczewski
BRUSSELS (Reuters) -France and Germany will discuss later this month how strict new EU fiscal and debt rules should be, to create a basis for a pan-European deal by the end of the year, the finance ministers of both countries said on Thursday.
The talks are part of a revision of the EU’s fiscal rules that underpin the euro and that financial markets are watching closely. The rules have been suspended since 2020 but are to be reinstated from 2024, and EU governments want to update them before they kick in again.
EU finance ministers discussed changes to the rules at a meeting in Brussels on Thursday and would meet again for an extra session at the end of the month to boost the chances of a deal at their next regular meeting scheduled for Dec. 8.
“There is still a final mile to walk but, like the pilgrims in the Camino de Santiago (ancient pilgrimage routes), we’re starting to see the cathedral at the end of the way,” Spanish Finance Minister Nadia Calvino, whose country holds the rotating EU presidency and is therefore in charge of finding a compromise, told a news conference.
“We see there is a very strong commitment by all member states to contribute to work together and to reach a balanced deal before the end of the year,” she said.
German Finance Minister Christian Lindner said before the meeting that his French counterpart Bruno le Maire would visit him later in November to discuss the “level of ambition” between the two biggest EU countries who are key to reaching a deal.
“A Franco-German initiative could lead to a mutual understanding among all EU member states,” German Finance Minister Christian Lindner said.
BALANCING DEBT REDUCTION AND INVESTMENT
The Stability and Growth Pact rules limit budget deficits to 3% of GDP and debt to 60%, with disciplinary steps for those not cutting any excess fast enough.
Many European governments far exceed the limits now, while also needing to invest to fight climate change.
The European Commission initially proposed that any decline in debt over four years should be acceptable. Germany insisted on minimum annual amounts, called benchmarks, that would be the same for all.
Berlin also wants the new rules to say governments should aim for budget deficits below 3%, creating a buffer to cover unexpected events. Lindner told reporters that the idea of buffers on debt to GDP and annual deficits was acknowledged in the latest compromise proposal by the Spanish presidency.
“So now it is about numbers, not only instruments so I am optimistic but much more work needs to be done,” he said.
EU ministers also are haggling over the balance of power between them and the European Commission and how to effectively enforce the rules.
French Finance Minister Bruno le Maire said ministers wanted a deal on new rules by the end of the year.
“The EU needs those new rules. The old ones are outdated, obsolete. We need to fund our investments, to guarantee the EU’s financial stability,” he said.
(Reporting by Jan Strupczewski, Marine Strauss in Brussels and Maria Martinez in Berlin; editing by Philip Blenkinsop and Bernadette Baum)