Germany doesn’t fit. The proposal to reform the stability pact that the European Commission is putting on the table does not convince Berlin, which sees an excessive loosening of the common rules on public finance management. Christian Lindner, Minister of Finance, promises battle and has already let it be known that “further debate” will be needed in Europe before being able to endorse the new pact. There are some red lines that cannot be crossed, and Linder makes them clear. “Germany cannot accept proposals that amount to a softening of the Stability and Growth Pact”.
Constraints, reforms and control of accounts: the new Stability Pact in X-rays
edited by marco bresolin
It is feared that the Community executive has opted for a too “soft” line. We want guarantees, which we don’t see at the moment. “We only agree on rules that will effectively lead to a reliable path to debt reduction and public finance stability,” Lindner clarifies. The informal meetings of the Eurogroup and Ecofin scheduled for this weekend in Stockholm (April 28 and 29) will be the beginning of this discussion, which runs parallel to the majority checks. Because Lindner will also have to deal with his social democratic (SPD) and green allies. When he says that “no one should misunderstand that federal government approval is automatically assured”, the underline applies to both national and European partners.
Giorgetti forced to stall again, Rome fears that the hawks will upset the Pact
by our envoy Ilario Lombardo
In Brussels they try to reassure. It is clarified that attention will be paid to net government spending, the only item that responds to state control. Because, they explain in the EU capital, revenues can fluctuate depending on general economic trends, which cannot be managed by national executives. Shopping, on the other hand, yes. And this is where the Commission’s assessment will operate. The introduction of the obligation of a deficit/GDP ratio of within 3%, with the consequent correction of 0.5% a year in the event of a surplus, intervenes precisely on this: net public spending. It was decided to intervene here due to the previous rules on debt reduction, one twentieth a year of the excess above the 60% reference threshold, it is considered difficult to satisfy. With these clarifications an attempt is made to reassure Berlin, where, however, they want “clear rules, with numerical references and thresholds”.
An account worth 60 billion: thus Italy is once again under special observation and will be called upon to make significant savings
Marco Zatterin
The Commission does not clarify the details of the technical debt reduction trajectories. They will hopefully be defined at the beginning of 2024, in the event that the proposed reform of the pact is approved in the time frame hoped for by the EU executive, i.e. by the end of 2023. It is these missing details that see Linder stiffen. “We need to ensure that the economy in Europe is stable and overcome high debts and deficits.” Words that sound like a warning to Italy, the second EU member state for the amount of debt in relation to GDP.
The Meloni government seems to be able to count on the support of France. In principle, the Paris government does not disdain the Commission’s proposal. On the contrary, differentiating national trajectories of debt, taking into account investments, guaranteeing appropriation by states, “all this is a battle won”, diplomatic sources admit. For the French, care must be taken that there is no reintroduction of old methods or elements that have not worked in the past, the same sources confide. An approach that seems to be in contrast with the German position. But much will depend on the political confrontation that opens tomorrow in Stockholm.
In the club of the Twenty-seven Austria and the Netherlands marry the German line of more demanding rules, and in the background there is a scenario of the re-proposition of the tug of war between the frugal of the north and the south in favor of greater flexibility.