BRUSSELS, April 27 (Reuters Breakingviews) – The European Commission’s efforts to appease fiscal hardliners have not yet opened doors for a badly needed reform of the bloc’s fiscal rules. Despite extensive consultation, and the addition of a concrete debt-cutting requirement for countries too far in the red, German Finance Minister Christian Lindner says the new rules don’t pass muster.
Specifically, Germany does not like a proposal to allow the Commission new flexibility to negotiate budget targets with European Union countries. Although current debt rules have never been enforced – because required cuts would be too punitive to work – Berlin likes their semblance of objectivity. The impasse puts the Commission in a bind: because changes are on the table, it can no longer even pretend it will insist on the old requirements to the letter. But in the absence of a new system, it will have to go through the motions for 2024, and possibly beyond.
As proposed on Wednesday, the new rules would simplify economic goal-setting, establish four-year plans for reining in runaway finances, and require countries with deficits exceeding 3% of gross domestic product to adjust by 0.5% of GDP per year. Even though that’s less stringent than the current system, France already says it’s too rigid, and Italy wants more exceptions for green investment. Berlin had better brace for a fight. (By Rebecca Christie)
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Stubborn Germans leave EU budget reform in a fix
