France will be able to reach a compromise with the new German government to update the European Union’s fiscal rules to face economic challenges following the COVID-19 pandemic, French Finance Minister Bruno Le Maire said on Monday (29 November).

The EU launched a review of its fiscal rule book last month to better reflect the new reality of higher public debt and the huge costs of transitioning to a zero-emissions economy.

The Stability and Growth Pact, which sets out fiscal rules in the EU, has become more complex over the years and has been a source of tensions.

Fiscally conservative countries such as the Netherlands and Germany have traditionally opposed watering it down, but the three parties set to form Germany’s next government signalled an openness to reform in their coalition agreement last week.

“I am convinced that we will be able to find an agreement on the necessary reform of the Stability and Growth Pact that guarantees euro zone stability and allows more and greener growth,” French Finance Minister Bruno Le Maire told a joint news conference with Irish Finance Minister Paschal Donohoe.

Le Maire said the debate between the so-called frugals of northern Europe and the rest of the EU member states was outdated.

The main issue now was how Europe could ‘decarbonise’ its economy while defending its interests internationally in the face of economic powers such as the United States and China, Le Maire said.

Donohoe, who chairs the Eurogroup of euro zone finance ministers, said he expected a challenging debate on the Growth and Stability pact but expected a lot of progress under France’s presidency of the EU during the first six months of 2022.

“While there are differing views on these topics, there is also an appreciation about what we can do collectively and I believe we can harness that and I believe we will get an agreement,” Donohoe said.