Germany’s new finance minister has called on EU governments to pay down their debts as the bloc embarks on an overhaul of its divisive budget rules.
istoric tensions were evident on Monday as the eurozone’s 19 finance ministers met in Brussels for the first time this year, with Spain’s Nadia Calviño saying the EU should avoid a return to the old rules – known as the Stability and Growth Pact – while her Austrian and German counterparts advocated for getting back to normal.
“In my view, the Stability and Growth Pact has proved its flexibility during the crisis, but now is the time to build up fiscal buffers again,” said Christian Lindner, the German coalition’s new liberal finance minister.
“We need resilience, not only in the private sector but in the public sector, and this is why I am very much in favour of reducing sovereign debt.”
The EU has suspended its budget rules – which limits deficits to 3pc of gross domestic product (GDP) and forces governments to reduce excess debt by 5pc a year.
French finance minister Bruno Le Maire, whose country holds the rotating EU presidency, compared the EU’s growth prospects with the US, and said that while common budget rules are necessary, growth and investment are paramount.
“First of all, this is a pact for growth. To turn things around, growth comes before stability,” he told reporters in Brussels ahead Monday’s meeting.
“We need more prosperity for Europe. There is no reason why the European Union has a growth level of 1.2pc or 1.3pc when the US is at 2.5pc.”
The Netherlands has traditionally been a leading force in the so-called Hanseatic League of more frugal northern European countries, but new Dutch finance minister Sigrid Kaag was non-committal, calling for a “pluralistic approach”.
“Frugality is always an asset.” she said. “Sometimes we’ve rallied with France on certain issues. On other matters we might be more aligned with Germany or the Nordic countries. I would say it varies.”
EU economy commissioner Paolo Gentiloni said changes to the rules are required because of massive Covid-19 debt and future climate investments and that the EU would not be “repeating old discussions”.