Economic and finance ministers of the European Union sealed on Wednesday a deal to reform the bloc's fiscal rules, a breakthrough made only possible after Germany and France found a middle ground.
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00:00 EU member states on Wednesday reached a deal on the reform of the bloc`s fiscal rules regulating
00:06 deficit and debt. The goal is to ensure the public finances are restored without jeopardizing
00:14 investment. It was a long and difficult negotiation between the 27 EU finance ministers who knew
00:21 that if they came out empty-handed, the complex and inflexible stability pact rules as it
00:26 were known, which were suspended because of the pandemic and energy crisis, would once
00:30 again apply next year.
00:49 The breakthrough was only made possible after Germany and France found some middle ground.
00:54 The preliminary agreement reached includes many, if not all, of the main demands voiced
00:59 by Germany, which had a large number of allies than France and therefore a stronger bargaining
01:04 hand. Brussels is proposing that member states present their own fiscal adjustment paths
01:11 over a period of at least four years in order to ensure the sustainability of their debt.
01:17 But it introduces a series of numerical safeguards, one of them based on debt and another on deficit.
01:24 "So I think the main framework is much better. But on the other hand, the number of so-called
01:31 safeguards or simple numerical requirements were added, which unfortunately does not allow
01:39 that only the debt sustainability should be the only focus, but some of these simple numerical
01:45 rules will also have to be met. But overall, the new set of rules is an improvement compared
01:52 to the existing rules."
01:54 He also says that one major weakness of the newly agreed fiscal rules is that they do
01:59 not offer a space for green and digital investments, and that the green investments are absolutely
02:05 necessary.
02:08 "The EU has to meet its climate goals. And in order to meet that, almost every EU country
02:19 would have to increase green public investment by about half a percent or one percent of
02:25 GDP in the coming years. But unfortunately, the new rules do not make any exception for
02:34 green investment."
02:35 In fact, the EU countries that have to spend more on defence could be excluded from the
02:39 excessive deficit procedure. Negotiations will now begin with the European Parliament
02:44 on the issue.
02:45 [BLANK_AUDIO]