European Union members are expected to reach a compromise on a proposed reform of EU fiscal rules by the end of the year, the finance ministers of Germany, France and Poland said on Tuesday after meeting near the eastern German city of Weimar.
“Growth in government spending must be slower than the growth of the economy,” German Finance Minister Christian Lindner said at a joint press conference with his Polish and French counterparts Magdalena Rzeczkowska and Bruno Le Maire.
“We need functional and realistic objectives,” Lindner said.
The EU fiscal rules, called the Stability and Growth Pact, have been suspended since 2020 to help governments deal with the COVID-19 pandemic and then due to the Russian invasion of Ukraine and the resulting surge in energy and food prices.
The rules are due to be reimplemented in 2024 and the EU is working against the clock on a reform so that new rules will be in place for next year.
“It is our strong view that we can reach a compromise by the end of 2023 and we must reach a consensus,” Le Maire said.
France and Germany agree on the necessity to return to solid public finances, the disagreement is on how these rules should be implemented.
The Germans favour automatic debt reduction targets while the French want more flexibility, according to Le Maire. “Now we have to define the European way,” he said.
Lindner was also optimistic about reaching an agreement by the end of the year, but he was clear on the German position: “Public finances don’t work with words, but with numbers,” he said, insisting on the need for numerical benchmarks.
