by Jan Strupczewski

BRUSSELS (Reuters) – European Union (EU) finance ministers have moved closer to an agreement on new budgetary rules but have failed to finalize the negotiations, which will continue this Friday.

After discussions lasting more than eight hours the day before, which ended late at night, ministers meet again at a Council for Economic and Financial Affairs (Ecofin) in Brussels intended to develop the stability pact and growth of the block.

“We made important progress last night (…) Before the Council, we agreed at 90% on the new rules of the Stability and Growth Pact, we are now in agreement at 95%,” he said. French Economy Minister Bruno le Maire said on Friday upon his arrival for the meeting.

“The last step is always the most difficult, we must not minimize the efforts that remain to be made in the hours and days to come,” he added.

France remains determined that an agreement will be found by the end of the year, continued Bruno Le Maire, who said he was in favor of a new Ecofin being organized if necessary before December 25.

A position shared by the Spanish Minister of Finance, Nadia Calvino, who also reported “significant progress” in the discussions.

“We are almost there (…) I hope that in the coming days we will be able to finalize.”

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.

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.

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.

(Reporting by Jan Strupczewski and Charlotte Van Campenhout, by Camille Raynaud and Blandine Hénault, edited by Kate Entringer)

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