The Ministers of Economy and Finance of the Twenty-Seven met yesterday in the community capital to try to unblock the reform of the fiscal rules that will come into force again in 2024, after years in the freezer to face the economic havoc after the pandemic. Although the agreement seemed on track after the Spanish presidency put on the table a document that included many of the demands of the hawks led by Germany, at the last moment France has shown its disagreement with this approach. According to Paris, countries with excessive deficits greater than 3% should be able to reduce their annual structural deficit by a smaller percentage if they carry out structural reforms that boost the economy – a cut of 0.3% compared to the 0.5% in the document. of the Spanish presidency.
This reform of fiscal rules was initially intended to adapt the debt reduction paths to the particular circumstances of each country after the tap of public money in recent years, but Germany struggled for this to be accompanied by measurable objectives. Finally, the compromise proposal prepared by the Spanish presidency, which is leading the negotiations until the end of the year, stated that those countries with a debt greater than 90% had to reduce this figure by 1% and that countries with a deficit of less than 3% % of GDP have to be cut to 1.5% in order to accumulate reserves for future crises.
Paris believes that this text does not protect investments and the French Economy Minister, Bruno Le Maire, has warned of the need for "clear, firm and credible" rules. Italy has also shown its rejection of the text.
The Spanish presidency yesterday called a dinner with the aim of reaching an agreement, before the meeting of the EU Economy and Finance Ministers this Friday. At the entrance to the meeting, the economic vice president, Nadia Calviño, admitted that the night would be "long", despite the fact that the compromise proposal is "balanced" since it contains rules "adapted to the characteristics of each of the States." .
The negotiation of fiscal rules coincides with the election of the EIB presidency. Calviño starts as a favorite, although one of the big questions is whether France will support her, after demanding that Spain be less close to the German positions, which do support Calviño, and more closer to the countries of the South. At the time of going to press, negotiations were continuing. It will be a very long night.