Brussels, Jan 17 (AFP\/APP):Germany and France laid out differing visions for the future of the European economy Monday, signalling a fight later this year to overhaul the bloc’s strict rules on government spending.<\/p>\n
The EU wants to simplify the decades old regulations on running national budgets, and the positions taken by the eurozone’s top two economies will drive the debate.<\/p>\n
The rules force members of the eurozone to cooperate when drawing up their spending plans, an exercise that gained importance after the debt crisis of 2010-15, which nearly sank the single currency.<\/p>\n
Berlin’s new finance minister, Christian Lindner, was attending his first meeting with his eurozone counterparts, and made it clear that his focus will be on keeping spending under control.<\/p>\n
Though part of a newly installed coalition with the centre left and greens, Lindner comes from the liberal FDP, which has traditionally held to a sound spending, zero deficit policy.<\/p>\n
“It is crucial that we continue to pay attention to the importance of the fiscal rules,” Lindner said as he arrived for the talks.<\/p>\n
“Fiscal rules are crucial to maintaining the credibility of governments vis-\u00e0-vis the capital markets.”<\/p>\n
The rules, known as the stability and growth pact, limit government debt to 60 percent of an economy’s annual GDP and its yearly deficit to three percent.<\/p>\n
– Constructive spirit –<\/p>\n
The debt rule is often broken and France and Belgium have joined Italy, Spain and Greece with debt ratios of more than 100 percent, reflecting years of overspending.<\/p>\n
In response to the Covid-19 pandemic, the rules were suspended and are due back into force at the end of the year, hopefully with new benchmarks in place.<\/p>\n
“I’m very much in favour of reducing sovereign debt and this is one of the important details,” Lindner said.<\/p>\n
But French Finance Minister Bruno Le Maire insisted the bloc’s energy should be directed towards growth, especially since Europe’s covid-era recovery is trailing that of the United States.<\/p>\n
“It must be a growth pact first. Growth comes before stability,” Le Maire said, with France in favour of allowing the massive investments needed to green Europe’s economy to be absolved from the rules.<\/p>\n
The discussion is not expected to begin in earnest until June, Lindner told reporters, when the European Commission is expected to table its proposal to amend the rules.<\/p>\n
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”.<\/p>\n
The debate will rumble on until at least EU leaders meet at a summit dedicated to the topic in March.<\/p>\n","protected":false},"excerpt":{"rendered":"
Brussels, Jan 17 (AFP\/APP):Germany and France laid out differing visions for the future of the European economy Monday, signalling a fight later this year to overhaul the bloc’s strict rules on government spending. The EU wants to simplify the decades old regulations on running national […]<\/p>\n
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