French Finance Minister Bruno Le Maire said a deal between the European Union’s two biggest economies would be the basis for updating fiscal rules.
Le Maire told reporters on Tuesday ahead of a meeting with his EU peers in Luxembourg:
The EU needs new budget rules quickly — it’s a question of credibility. We will continue to work with Christian Lindner in the coming weeks to try to reach a Franco-German accord that could serve as a basis for a wider deal.
During the Covid pandemic, there was a sharp rise in public debt. As a result, the set of fiscal rules binding the eclectic eurozone economies needs a radical and comprehensive overhaul. However, governments with opposing policy views are finding it difficult to agree on exactly how to do this.
German Finance Minister Lindner warned that bond investors would harshly price a toothless agreement. Le Maire expressed confidence that an agreement would be concluded before the end of the year, with the next discussion expected at a meeting of finance ministers in early November in Brussels.
Spaniard Nadia Calvino, who takes turns chairing the meeting of EU finance chiefs, said the aim was to present a legal proposal at the next Ecofin meeting so that a new agreement could be concluded by the end of the year. She said:
Good progress has been made at the technical level.
