The meeting of European Union finance ministers ended on Friday night without the ministers managing to reach an agreement on the budget rules to be implemented starting next year. However, the ministers hope to reach an agreement by the end of December.
The biggest differences concern the positions of the French and German governments, although a diplomat present at the meeting told Politico that each of the 27 ministers present made different requests.
The EU fiscal rules have not been applied since 2020. Initially the reason for the suspension of the rules was the coronavirus pandemic, then the large-scale invasion of Ukraine by Russia in 2022 and the resulting increase in commodity prices energy carriers.
As the non-enforcement exemption expires at the end of this year, Member States should start complying again from next year.
Ministers agree that the restrictions according to which the nominal deficit of the Member State’s state budget cannot exceed 3% of gross domestic product and the debt burden of the Member State cannot exceed 60% of GDP will be eliminated by new in force. If a country does not comply with these rules, it is subject to an excessive deficit procedure (EDP).
Finance ministers were unable to agree on the rules of this procedure. While France and Italy ask for exemptions that also allow investments in priority sectors for the government during the procedure, Germany does not agree to make such an exception.
The Spanish Presidency of the European Union has proposed that participating countries reduce their budget deficit by at least 1.5% of GDP and their debt by 1% of GDP every year.
However, this compromise proposal did not satisfy all parties.
However, finance ministers are optimistic and believe that it will be possible to agree on an update to the budget rules in the coming weeks.
“Today we have made fundamental progress in the reform of European fiscal rules, thanks in particular to the Spanish Presidency,” said French Finance Minister Bruno Le Maire.
New discussions will be started on the basis of the new compromise proposal between Spain, France, Italy and Germany. According to a source interviewed by Politico, the proposal would allow more flexible rules for countries undergoing excessive deficit procedures, but only from 2025 to 2027. The rules would then become stricter.
France and Italy are interested in the details of the excessive deficit procedure, as the European Commission is likely to launch a corresponding procedure against them next year.
2023-12-08 13:05:00
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