According to French Finance Minister Bruno le Maire, the fundamental objective of the overhaul of the European Union’s budgetary rules, which is currently underway, is to reconcile the substantial investment demands of the bloc of 27 countries with a realistic rate. debt reduction. After chairing a meeting of EU finance ministers, the Mayor said the debate over rule changes was no longer between the “frugal” and “spend-spend” camps, as it had been during the sovereign debt crisis a decade earlier. “The discussion between the frugal and the less frugal is an old debate; we moved on,” Le Maire told a news conference. “No one is suggesting that we need to go back to severe economic restrictions immediately. It’s impossible; it would stifle growth,” he said.
At the same time, tackling climate change requires huge public and private investments over decades that many believe should be reflected in EU legislation. Germany’s new finance minister Christian Lindner, speaking at a separate press conference, said he was open to changes to EU fiscal rules, even though his FDP party is seen as the most fiscally conservative of the ruling coalition in Germany. “No, I’m not a scary hawk – I’m a friendly hawk,” Lindner told reporters. “I am open to arguments and Germany wants to be part of the solutions – not part of the problem.” “Going forward, we need to bring together the idea of growth as well as the objective of financial stability and sustainability of public finances,” Lindner said.
“The real discussion now concerns the balance to be found between investment and a return to sound public finances. We all want to see investments… we all also want to reduce the debt,” he said, stressing that there was no difference on the subject between France and Germany. Fiscal rules, designed to limit public borrowing to preserve the value of the euro, are currently being reviewed as the COVID-19 pandemic has inflated EU public debt so much that existing laws can no longer apply.
The Mayor said there was no debate on the essential need to reduce the debt. “The real question is how fast,” he said, pointing out that the pandemic had pushed the gap in public debt levels between some EU countries up to 100 percentage points. He said the other challenge was investment, which the European Commission estimates for the EU at more than half a trillion euros a year for the next 10 years, to transform Europe’s economy so that it will no longer emit carbon dioxide (CO2) by 2050. “We need private investment for this, public investment will not be enough, public investment must be leveraged,” said Le Maire .
Summary of news:
- EU tax rules have been updated to balance investment and debt reduction
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