EU members strike deal on looser fiscal guidelines – DW – 12/20/2023 | EUROtoday

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Finance ministers from EU member states have agreed on proposed modifications to the bloc’s guidelines to restrict money owed and deficits in member states’ spending.

“I am happy that after a long discussion and tough negotiations, we have now reached a good agreement on the EU’s fiscal rules,” Dutch finance minister Sigrid Kaag stated after ministers held a two-hour video assembly.

The new guidelines set minimal quantities of common deficit and debt discount a authorities should observe, to fulfill the frugal camp of EU international locations that’s led by Germany. But, on the whole, the brand new guidelines are extra lenient than the earlier framework, marking a win for the principally southern international locations led by France.

The plans nonetheless should be adopted by the international locations and negotiated with the European Parliament.

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Germany praises new guidelines

The new fiscal guidelines are each extra real looking and simpler, German Finance Minister Christian Linder wrote in a put up on X, previously Twitter.

“They combine clear figures for lower deficits and falling debt ratios with incentives for investment and structural reform,” he stated, including that it might strengthen stability within the bloc.

The settlement among the many 27 EU international locations was preceded by a Franco-German proposal that Lindner and his French counterpart Bruno Le Maire agreed on Tuesday night. The EU’s two financial heavyweights had been at odds over the foundations for a while.

The settlement can have no impression on the EU members’ fiscal coverage in 2024 as a result of nationwide budgets for subsequent yr have already been selected the idea of tips agreed earlier in 2023.

Why is the deal essential?

The deal is the fourth reform of the EU’s fiscal guidelines, often called the Stability and Growth Pact, which is designed to underpin the worth of the EU’s single forex, the euro, by limiting authorities borrowing.

This is with a view to stop nationwide debt difficulties, and resultant stress on the euro forex, akin to these skilled within the aftermath of the monetary disaster in international locations like Greece, Spain, Italy and Portugal.

The pact was designed to offer some shared requirements on home fiscal coverage within the EU, with this concern nonetheless kind of utterly within the management of particular person member states. It’s additionally deemed mandatory provided that eurozone members share a forex and central financial institution so that they do have unified financial coverage.

It units nominal limits of three% of GDP for annual authorities deficits and 60% of GDP for total public debt.

That stated, nearly each EU member, Germany included, is at the moment nicely above the 60% public debt goal within the aftermath of heavy spending in the course of the COVID pandemic.

This stress in recent times, exacerbated additional by the Russian invasion of Ukraine, put nearly each EU member in breach of its personal targets and prompted requires reforms that will set a extra real looking path again in the direction of the specified benchmarks.

dh/msh (AFP, dpa, Reuters)