Spain opens the door to a 1% annual debt reduction to lure Germany into a fiscal rules pact. That country’s finance minister, the liberal Christian Lindner, has set fiscal orthodoxy as a red line for a new stability and growth pact that will be reactivated in 2024 after nearly four years on hold because of the pandemic and then the war. Ukraine. The return of fiscal rules means that countries must re-tighten their belts to reach 60% debt and 3% deficit of GDP, at most.
How to achieve this figure is what the 27 economy ministers have been working on all this year, and now the negotiations are in the final stages. Economic Vice-President Nadia Calvino, as President of the Council of the European Union, has put a proposal on the table of her European colleagues, in which she proposes an annual reduction of the debt, which Germany has been asking for. According to Bloomberg’s proposalCountries will be required to reduce by 1% each year if their debt exceeds 90% (which is the case of Spain, by the way) and by 0.5% if the debt exceeds 60%.
This will be the proposal that economy ministers will discuss at a meeting this Friday, where they intend to close the position that serves to negotiate with the European Parliament and the European Commission, which included in its proposal a minimum reduction of the deficit. In the new organization of the Stability and Growth Pact, which sought to give more flexibility to member states to maintain healthy accounts in exchange for a more accommodating sanctions regime.
The proposal that Spain put on the table also contains the last condition of Germany, which wanted member states to ask for an adjustment to the level of the deficit, even if it is below 3%.
With the text proposed by the presidency, it is aimed at attracting Germany, which has particularly clashed with France, which has expressed concern that the new fiscal corset will act as a brake on the necessary investments in the EU to improve competitiveness.
Source: El Diario