by Jan Strupczewski
BRUSSELS (Reuters) – European Union finance ministers moved closer to agreement on new budget rules early on Friday, but they will need more time and perhaps another meeting to reach a deal, two officials familiar with the negotiations said.
France and Germany still disagree on how to support investment when the budget deficit exceeds limits set by the EU, and other countries disagree on issues such as the minimum pace of annual debt reduction.
“They’re done for tonight,” said a European diplomat. “I understand that significant progress has been made, but that further consultations are required from a political and legal point of view.”
Currently, the rules of the Stability and Growth Pact limit budget deficits to 3% of GDP and public debt to 60%, and provide disciplinary measures for those who do not reduce their surpluses quickly enough.
Many European governments already exceed these limits well, and there is broad consensus on the need to update the rules to allow more investment, particularly to combat climate change, although opinions differ on the scale room for maneuver.
The reform currently under discussion aims to relax current requirements in terms of fiscal consolidation by offering each country tailor-made debt reduction trajectories, spread over four to seven years, as well as incentive measures for investment.
France and Germany are 90% in agreement on the reform of the Stability Pact, the finance ministers of the two countries declared Thursday at the opening of negotiations.
“The Spanish EU presidency will reflect on Friday on how to move forward and on the idea of organizing a possible additional meeting of EU finance ministers,” the diplomat said.
A second official familiar with the negotiations said another meeting could take place in December, as governments want to conclude talks this year.
Time is running out as the new rules must be approved by the European Parliament before it dissolves in April, with European elections due to be held in June.
“It looks like we are heading for another meeting in two weeks,” the second official said.
(Reporting Jan Strupczewski; Camille Raynaud)
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