Negotiations in Brussels: New debt rules in the EU are ready for decision

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Zhao Dingzhe / dpa

A reform of the European debt rules has been discussed for years - now the project has overcome an important hurdle. Negotiators from the EU states and the European Parliament agreed in principle on the new rules in Brussels on Saturday night, as the Belgian EU Council Presidency announced in the short message service X, formerly Twitter.

“Deal!” wrote the Council Presidency after 16 hours of negotiations. "The new rules will help achieve balanced and sustainable public finances and structural reforms and will promote investment, growth and job creation in the EU."

The reform is intended to modernize the stability pact. The aim is to enable investments and at the same time prevent individual member states from becoming too indebted.

The member states agreed on the reform shortly before Christmas (you can read an analysis of it here). Federal Finance Minister Christian Lindner (FDP) then explained that the new rules combine “clear figures for lower deficits and falling debt ratios with incentives for investment and structural reforms.” However, there were concerns in the European Parliament: the Left, the Greens and parts of the Social Democrats warned against excessively strict requirements and excessive austerity policies.

The so-called Maastricht criteria should remain unchanged despite the reform. According to this, the annual new debt of a state must not exceed three percent of gross domestic product (GDP). The total debt of a country may not exceed 60 percent.

However, the states should be able to interpret the requirements more flexibly. Highly indebted EU states such as France and Italy in particular insist on this. This should give states more time to adjust their budgets if they have very high deficits if they also make reforms and investments.

However, Germany implemented minimum requirements for reducing deficits and debts. In December, Lindner spoke of “safety lines for lower deficits and debt levels.”

According to the agreement reached by the negotiators, the new regulation still requires the final approval of the member states and the European Parliament. During the corona pandemic, the EU temporarily suspended the stability pact in order to enable member states to provide billions in aid for the economy. The old rules have been temporarily back in force since January.

sol/AFP