French Finance Minister Bruno Le Maire will meet his German counterpart Christian Lindner on Tuesday evening. The parties are trying to reach an agreement on the European Union’s future budget rules ahead of a meeting of EU finance ministers on Wednesday.
If Lindner and Le Maire fail to reach an agreement, the adoption of the new budget rules by the end of the year could be in doubt.
However, Lindner told reporters Tuesday evening that a deal could be reached within hours.
EU fiscal rules were suspended by member states in 2020 due to the coronavirus pandemic, later extended following Russia’s full-scale invasion of Ukraine.
From next year the rules will have to be applied again. France and southern EU member states are calling for a relaxation of the rules, arguing that a return to the old rules would mean forced austerity. However, Germany and northern member states fear compromising fiscal stability and falling into a debt spiral.
While member states agree that the current demands on the size of the debt and budget deficit will remain in place, they want to ease the demands in terms of how quickly the country violating the restrictions must start reducing the debt and the budget deficit. However, restrictions remain at the current level: the state budget deficit cannot exceed 3% of gross domestic product (GDP) and the debt burden cannot exceed 60% of GDP.
An EU official who spoke to Politico on condition of anonymity said Italy is the last major country that has yet to approve the details of the deal.
Lindner and Le Maire hope that if they can reach an agreement between themselves, it will put pressure on Italy and other countries to approve the deal on Wednesday.
However, member states may not approve the new rules even if Paris and Berlin reach a compromise. Therefore, the definition of the rules could be postponed until next year, when the rules should already be in force.
As an option, diplomats are also discussing freezing negotiations. In this way the negotiations with the member states would be postponed to January, but the talks could continue with the European Parliament, because a positive decision from this institution is required to approve the budget rules.
2023-12-19 19:08:00
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