Berlin rejected Gentiloni’s proposal for joint EU borrowing

The finance minister Christian Lindner (FDP) rejected today the proposal for “new EU borrowing” put forward by EU Economic Affairs Commissioner Paolo Gentiloni yesterday, stressing that “there is already a lot of money on the table” but better management is needed.

“We see no need for new financing tools at EU level or new common debt. We are convinced that the money available is sufficient to support the green and digital transition. Next Generation EU is part of the response to US anti-inflation legislation. We want this money to be targeted. One can do policy on the economy without money, just by avoiding regulation and bureaucracy (…) We are against the excessive extent of subsidies,” Mr. Lindner said a while ago, after the meeting he had with Mr. Gentiloni. He even warned “to avoid these confrontations, because no one can expect a good outcome”, while he also recalled the relevant restrictions imposed on the German government by the Federal Constitutional Court with its decisions.

Christian Lindner also said that negotiations with the US should continue and, referring to the upcoming joint visit of the German and French economy ministers to Washington, he spoke of “an opportunity for them to explain the negative consequences of American anti-inflationary legislation for European businesses” and he stressed: “We need trade diplomacy and not some kind of trade war or even a trade dispute. We share common values ​​and prefer to be trading partners.” He also underlined that the EU has 800 billion euros, but it needs less bureaucracy, shorter times for licensing, possibly a revision of taxation for the competitiveness of businesses. “We should not enter into competition, who can pay more subsidies,” he said characteristically.

Yesterday Mr. Gentiloni, in an interview with the Frankfurter Allgemeine Sonntagszeitung, had stated that “in view of high energy prices, billions in US aid to industry and competition from China, the European Union must take on a new debt of 350 billion euros – and indeed quickly”, asking for the relevant consent of Berlin. “This crisis mainly affects Europe and developing countries, not so much the USA and China (…) We must take into account that not every state can cope alone (…) and as a message to the markets, we must avoid giving the impression that we are just moving existing money back and forth,” the European commissioner noted. Today Mr. Gentiloni admitted that there are points of disagreement with Berlin, while highlighting the success of the European Union in limiting the consequences of the energy crisis. “We are headed for a year of sluggish growth, but not a deep recession,” he said and called for a joint response to the challenges in order to strengthen competitiveness.

Regarding the reform of the Stability and Growth Pact, the German Finance Minister pointed out that the European Commission’s proposal “does not yet show common positions” with Berlin, as “the concerns” of the German government are not yet recognized. “We doubt that the EU’s proposal will lead to a credible path to debt reduction,” Mr Lindner said, stressing that “a monetary union needs common rules”. He also asked to maintain the multilateral approach to the process and that there be no bilateral negotiations with the member states. “We want a credible path to debt reduction, we want rules that are understandable, that do not depend on political will, and we need to make sure together that these rules are realistic and flexible enough that countries can meet their investment needs them”, added the finance minister.

The European commissioner, on the other hand, emphasized that member states have different levels of debt, which, he said, must be taken into account when reforming the Pact.

RES-EMP

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