To combat the corona crisis, the EU countries have suspended the agreed debt brake.
The further procedure divides nations.
Where does Germany stand?
Berlin / Munich - The corona pandemic presents Europe's nations with a huge financial challenge. As a result of the state subsidies, the EU has suspended its debt rules for the time being because member states such as Germany, France and Co. have spent billions on citizens, business and industry. As a result, the national debt of countries like the Federal Republic of Germany has risen dramatically *. A fierce dispute has broken out over the dismantling of these obligations, which is also dividing the member states.
This became clear at the last meeting of finance ministers before the federal election * on September 10th.
Federal Finance Minister and SPD Chancellor candidate Olaf Scholz (SPD) is in a quandary.
We answer the most important answers on a topic that can have a huge impact on EU countries and their citizens.
Debt brake of the EU: Reduction of liabilities a "fight" of the nations
Why is?
In the Corona crisis, the EU suspended the Stability and Growth Pact for the first time in 2020, which is intended to ensure balanced budgets in the member states.
The so-called Maastricht criteria provide for new borrowing of a maximum of three percent of gross domestic product (GDP) if the EU countries do not want to risk an excessive deficit procedure.
The total debt should not be higher than 60 percent of economic output.
What is the problem?
In order to avoid an economic crash, all EU countries went into massive debt in the pandemic, including Germany *. Finance Minister Scholz, for example, is planning a gigantic new debt of almost 100 billion euros in the coming year. To do this, he even has to use an exception clause in the debt brake in the Basic Law. "An enormous political struggle" is emerging in Europe over the reduction of this mountain of debt, as an EU representative warns.
Where are the lines of conflict?
France, Italy and other member states want to relax the EU stability pact.
France's Finance Minister Bruno Le Maire called the debt rules in Slovenia “obsolete”, while his Spanish colleague Nadia Calviño pleaded for them to be “adjusted to reality”.
French President Emmanuel Macron recently criticized the three percent deficit rule as being “from another century”.
Macron wants to invest and looks ahead to the French presidential election * in April.
Debt brake in the corona crisis: Mediterranean countries vs. conservative north
Why are Mediterranean countries particularly affected?
The corona crisis has torn particularly deep holes in the households there, as tourism, one of the main sources of income, disappeared. With old obligations from the financial crisis, Greece has accumulated a mountain of debt of more than 200 percent of economic output, Italy has almost 160 percent, Spain and France almost 120 percent. But the eurozone as a whole is also well above the 60 percent limit with an average of almost 100 percent.
Who is resisting the southerners?
A group of so-called “frugal” states wants to prevent the Stability Pact from being undermined.
They fear being asked to pay for the high debts of the southerners.
Austria, the Netherlands, Sweden and five other countries therefore demanded in a fire letter that “reducing excessive debts” must remain the goal.
New proposals should "not jeopardize the eurozone and the Union as a whole".
Germany and the debt brake: Chancellor candidate Scholz in a bind?
How is Germany positioning itself?
Scholz campaigned for a “middle” position in Slovenia. He praised that the debt rules had "passed their practical test" during the Corona crisis and demonstrated their "flexibility". But Scholz is in a quandary as the SPD candidate for Chancellor: On the one hand, he has to defend himself against allegations in the election campaign that he is heading for a left-wing alliance and a European "debt union", as Bavaria's Prime Minister Markus Söder (CSU) * raised him. That is why Scholz rejected the demands of the Mediterranean countries - knowing full well that in the event of an election victory he would have to seek a compromise with France's closest partner.
What role does the federal election play?
The future German stance depends to a large extent on this: If the new finance minister should be Christian Lindner (FDP), the government would presumably demand a tight austerity course for Europe.
If, on the other hand, Robert Habeck (Greens) takes over the office, this could mean a spending-friendly attitude, for example for climate protection.
Which party is threatened with the tax shock?
Parties from the Greens to the Union in the check.
What's next?
The Commission wants to hear the EU governments and central banks before it makes a reform proposal in the autumn - after the general election.
In the
Merkur
interview, Green Chancellor candidate Annalena Baerbock speaks about coalition options and distributes against the FDP, the Union and the Left. She also speaks out on reforming the debt brake.
(PF / AFP)
* Merkur.de is an offer from IPPEN.MEDIA
