Germany wants to force debt cuts in EU spending rules

BRUSSELS

Economic powerhouse Germany wants EU members to be given binding targets to slash their debts under new spending rules being prepared by Brussels, a document seen by AFP has showed.

In November, the European Commission, the EU’s executive arm, put forward plans to reform the Stability and Growth Pact that limits how much EU countries can borrow.

The pact says states’ public deficits should not go above three percent of gross domestic product, and debt should stay below 60 percent of GDP.

Brussels wants to give wiggle room to EU members to implement reforms and investments that contribute to the green and digital transitions, two priorities for the EU.

Germany, a staunch defender of budgetary stability, is calling for countries with debt ratios of over 60 percent to be made to reduce it by 0.5 percent a year, the proposal says.

EU states with their debts far above that level would have to cut it by one percent annually.

Berlin fears the reform envisaged by Brussels would overly relax the EU’s budgetary straitjacket and could undermine fairness within the bloc.

Greece has the highest debt to GDP ratio among the EU’s 27 nations at around 170 percent, followed by Italy near 140 percent and Portugal at 120 percent.

Germany is over 60 percent.

The EU’s executive is hoping to put forward draft legislation for the reform around the end of April that will then have to be negotiated with the deeply split member states.