March 5, 2021

Berlin bets on fiscal “flexibility” in the EU to stop COVID-19

German Finance Minister Olaf Scholz said on Friday that he will bet that all European partners have sufficient budgetary “flexibility” to do what is “necessary” against the coronavirus pandemic.

In a press conference in which he presented the German plan to combat the economic consequences of COVID-19, Scholz assured that he will defend that the 27, regardless of their fiscal margin and deficit criteria, “also have the possibility of doing what they need. “

The ministers of Economy and Finance of the EU plan to meet this Monday – in person or virtually – with the coronavirus crisis as the main item on the agenda.

Scholz intends to send all his European colleagues a “clear message” that it is not just about coordinating their economic and fiscal policies, but also ensuring the “stability” of the bloc.

Parallel to this announcement, the European Commission announced from Brussels its decision to relax the debt criteria of the Stability and Growth Pact.

The finance minister repeatedly avoided clearly answering journalists’ questions about whether his defense of the “zero deficit” had died with this message, but insisted that the coronavirus health and economic crisis is “extraordinary.”

However, he acknowledged that “it is not unthinkable” that Germany needs to resort to the markets during this crisis and go into debt this year.

The Minister of the Economy, Peter Altmaier, indicated in this same press conference that in an extraordinary situation it is necessary to do what is necessary without thereby damaging the underlying philosophy that governs fiscal policy in normal times in Germany and Europe.

Germany, Europe’s leading defender of budget stability, has chained eight consecutive years without running a deficit and has managed to reduce its public debt to below 60% of gross domestic product (GDP).


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