July 15. 2024. 7:45

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Germany wants to force debt cuts in EU spending rules

Economic powerhouse Germany wants EU members to be given binding targets to slash their debts under new spending rules being prepared by Brussels, according to a document seen by AFP on Thursday (6 April).

In November, the European Commission, the EU’s executive arm, put forward plans to reform the Stability and Growth Pact that limits how much EU countries can borrow.

The pact says states’ public deficits should not go above 3% of gross domestic product, and debt should stay below 60% of GDP.

Brussels wants to give wiggle room to EU members to implement reforms and investments that contribute to the green and digital transitions, two priorities for the EU.

Commission proposes more individual debt rules for EU countries

The European Commission presented its proposals to reform the debt and spending rules for national governments on Wednesday (9 November) as individual plans for every EU country, negotiated between national governments and the Commission.

Germany, a staunch defender of budgetary stability, is calling for countries with debt ratios of over 60% to be made to reduce it by 0.5% a year, the proposal says.

EU states with their debts far above that level would have to cut it by 1% annually.

Berlin fears the reform envisaged by Brussels would overly relax the EU’s budgetary straitjacket and could undermine fairness within the bloc.

Greece has the highest debt to GDP ratio among the EU’s 27 nations at around 170%, followed by Italy near 140% and Portugal at 120%.

Germany is over 60%.

The EU’s executive is hoping to put forward draft legislation for the reform around the end of April that will then have to be negotiated with the deeply split member states.

EU finance ministers agree on broad outline of new deficit rules

EU finance ministers agreed on a common position for reforming European fiscal rules, but still left some crucial parts unclear, calling for further clarifications and deliberation.