In Berlin, the Greens, Liberals and Social Democrats are wrestling in the coalition negotiations over which position a future federal government will take in the upcoming debate on the future of the “Stabipakt”. "The Stability and Growth Pact has proven its flexibility," says the paper that the parties drew up at the end of the exploratory talks. This is a commitment to the pact and a rejection of radical reform, but it is open to interpretation. After all, there is no radical reform on the horizon anyway. The European Commission will initiate an official review of the pact this Tuesday, which is likely to lead to some emotional discussion. After all, the Stability Pact, despite all the flexible interpretation of the past few years,for some it is still a “holy cow” and for others a “red rag”. The fact that the rules are completely turned upside down is ruled out from the outset.

Hendrik Kafsack

Business correspondent in Brussels.

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The debate on the Stability Pact should actually start last year.

But then hardly the corona crisis.

Because this caused an economic slump and at the same time made huge government rescue packages necessary, the Commission drew an opening clause in the EU Stability Pact in March 2020 and suspended the regular budget rules.

This will not change until at least the end of 2022.

But the Commission does not want to wait that long with the debate.

After all, the new rules should be in place in 2023.

In addition, nothing has changed in the core results of the analysis of the Stability Pact from the beginning of 2020, according to the Commission.

Corona crisis makes the weaknesses clear

Above all, the Corona crisis has exacerbated the challenges facing the EU in terms of budget policy. She has shown how difficult it is to lay down rules that must apply under all circumstances. The rise in national debt makes it even more difficult to gradually reduce debt to an acceptable level without stifling growth at the same time, according to a draft of the Commission's discussion paper, which is available to the FAZ. After all, the double realignment of the economy from Green Deal and digitization will require high public investments for years to come. The Green Deal alone would require public and private investments of 500 billion euros a year by 2030.

The Commission's focus is therefore not on the criterion of limiting annual new borrowing to 3 percent of economic output. That has proven itself. Rather, it wants to review the second Maastricht criterion on the level of debt. The pact stipulates that the debt level will be limited to 60 percent of economic output. In fact, the debt ratio was much higher even before the Corona crisis. From the euro zone, only the Netherlands, the Baltic states, Luxembourg and Malta are currently below this level.

The German debt ratio is 71 percent.

National debt remains highest in Greece (210 percent) and Italy (155).

It was probably not entirely by chance that the head of the Euro Crisis Fund, Klaus Regling, in an interview with the magazine Der Spiegel at the weekend advertised for an adjustment to the no longer up-to-date rules on the level of debt.

This corresponds to the line of the French finance minister Bruno Le Maire, who described the debt rules as "partially obsolete".

Advance from France and Italy

Budget Commissioner Johannes Hahn, on the other hand, recently promoted a kind of stress test for the debts of the member states in order to then issue tailor-made recommendations for the states. In the paper, the Commission accordingly raises the question of whether and to what extent the EU can orient itself on the experience with the Corona reconstruction fund, which obliges the member states to draw up national reform and reconstruction plans. In addition, the Commission wants to know how the Stability Pact can be better coordinated with the European Semester, with which the Commission makes recommendations for reforms to the states every year.

The initiative by countries such as France and Italy to "deduct" certain investments, for example in climate protection or industrial policy, from debt, is also indirectly addressed in the Commission's paper.

All interested parties can comment on the reform of the pact by the end of the year.

She is unlikely to present her own proposals until after the French presidential election in spring 2022.