BRUSSELS ― EU finance ministers failed to agree on a reform of the bloc’s national spending rules as a meeting in Brussels broke up at about 3 a.m. without finding a compromise.
Ministers disagreed on several technical details around the pace at which countries have to reduce spending despite months of negotiations on the overhaul of the Stability and Growth Pact, which in its current version had been considered too strict and barely enforceable.
“Tonight we have made essential progress on the reform of European budgetary rules, thanks in particular to the Spanish presidency [of the EU],” French Finance Minister Bruno Le Maire said at the end of the meeting. “An agreement in the Council should be possible before the end of the year. We continue!”
Another EU diplomat was less positive, saying earlier in the night that “each of the 27 countries expressed a different opinion and different demands” and raising questions about the way in which discussions had been conducted.
Germany and other likeminded frugal countries had been insisting on stricter rules for highly-indebted countries, requiring them to cut their annual deficits ― the difference between spending and revenue ― at a faster pace. France and other southern countries called for greater flexibility.
Earlier this week, officials from Spain circulated a compromise text aimed at finding a middle ground between the two camps. The proposal, which served as a negotiation basis for the dinner talks, required highly-indebted countries to keep their annual deficits at about 1.5 percent of GDP and reduce debt by at least 1 percent of their GDP every year.
But the Spanish mediation proved to be insufficient.
“We have made a lot of progress today,” a separate EU diplomat said. “This is a challenging negotiation, and we are getting there.”
They said work would continue “in the coming days.”
Already on Thursday morning Le Maire hinted at Paris and Berlin being not yet on the same page on how fast high-indebted countries should cut spending.
As before, the rules will still require countries to bring their budget deficits to below 3 percent of GDP and limit their debt to 60 percent of GDP. Rules were suspended in 2020 to allow countries to fight the economic consequences of the COVID pandemic and remained on ice until the end of this year.
A French economy ministry official said a new compromise text by France, Germany, Italy and the Spanish EU presidency will serve as basis of new discussions.
