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Eight EU countries known as “the alliance of responsibility” who spoke out in favour of an early return to strict debt rules in a position paper in September 2021 are being pushed towards compromise with even Germany adopting a more conciliatory tone. EURACTIV Germany reports.
While these member states, including Austria, Scandinavian member states, the Netherlands, and the Czech Republic, still insist on sound public budgets, there is no longer any talk of an immediate return to the previous, strict rules. Instead, a broad consensus for the need for reforms seems to be emerging.
“We have learned the lessons of past mistakes when we were too quick to restore public finances and destroyed growth in the process,” French Finance Minister Bruno Le Maire said on 18 January during a press conference in Brussels.
“Nobody is asking today that we immediately return to strict budget rules,” he added.
Germany’s key role
Many states in the fiscally conservative alliance had hoped Germany would join their call to implement a rigid EU austerity policy when Christian Lindner of the liberal FDP party took over Germany’s finance ministry.
However, the FDP-led ministry has shown it is willing to compromise on reform.
For example, at last week’s meeting of EU finance ministers, Lindner stressed that Germany was “open to progress and further development” of the rules.
The finance ministry’s parliamentary state secretary, Katja Hessel, also stressed that the Stability and Growth Pact reform was an “important goal” that “we want to implement together with our neighbours.”
While Hessel said that Germany would continue to advocate for “sound and sustainable” finances at the EU level, she also stressed Germany’s “mediating role” in the debate.
“A reform of the Stability and Growth Pact should also ensure that future investments for the modernisation of the EU can be financed,” Hessel told EURACTIV.
The fiscally conservative
A change of direction also seems to be emerging in the Netherlands, which also joined the fiscally conservative allliance and is often branded as one of the EU’s so-called ‘frugal’ states.
The coalition agreement of the newly elected Dutch government speaks of a “constructive dialogue” that the Dutch want to enter to reform the Growth and Stability Pact. The reform proposals put forward by the EU’s southern member states “in an unbiased and open manner” will be discussed by the new government, a spokesperson told EURACTIV.
Sweden and Denmark are also showing restraint in the debate. “It is important to have a broad debate on this in the EU and to take time to think about how to proceed,” Sweden’s finance ministry has said.
Austria is the only country that currently remains stubborn on the matter. At last week’s meeting of eurozone finance ministers, Austrian Finance Minister Magnus Brunner pleaded for a “return to stricter rules when the crisis is over....
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