“We are close to a 100% agreement between France and Germany” on the text of the new one Stability pact and growth which will be examined today by theEcofin which will be held via video conference between the Ministers of Economy and Finance of all the countries of the European Union. This was announced by the French Minister of Economy, The Mayor, who met his German counterpart last night Lindner to define the final details of the agreement which mainly focuses on the parameters relating to deficit and public debt. The Italian minister was also kept informed of the agreement between the two largest European countries Giancarlo Giorgetti, which is "on the same line" but which was taken aback by the speed of France's implementation of the agreement and did not like it. Above all for image issues, because the impression is that Paris and Berlin decide everything and that theItaly can only follow up, but this is the reality.
Germany wants strict rules on deficit and public debt
German Minister Lindner, to cover his back at home, was keen to specify that "Germany would not accept rules that are not rigid, credible, sufficient and efficient to lead to lower debt levels and a reliable path to reduce deficits and I think that what we will obtain will be exactly this landing zone: we allow investments, we maintain fiscal space for structural reforms but compared to the old rules, the new ones will lead to lowering these levels and lowering deficits. The old rules are rigorous on paper, but not in application." A very clear message, although obviously a negotiation one.
Sul debt it was imagined that countries such as France and Italy which have a higher debt to 90% of GDP they must commit to reducing it gradually with an annual adjustment of at least 1% of GDP, i.e. well below the 3% escape clause, but the crucial point is how long this operation is expected to take be fulfilled. In five years or more?
Stability Pact: today's Ecofin meeting is decisive
The other essential point of the new Stability and Growth Pact is the percentage of annual reduction of the deficit, initially imagined between 0,5 and 0,7% but which could fall to 0,2%. Finally, the deduction of part of the interest expenditure on government bonds in the three-year period 2025-7 and that for Defense seems confirmed. But on all these aspects, where the devil hides in the details, Ecofin will have its say.
