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MNI: German Proposals A Basis For EU Debt Reform - Officials

(MNI) Brussels

German concessions on reform of EU fiscal rules could show the way towards a deal, officials say.

Proposals for reform of the European Union’s fiscal rules published by the German government last week, which make concessions to the need to promote growth and investment, could form the basis for an eventual compromise for overhauling the Stability and Growth Pact, EU officials told MNI.

While countries like Spain and Italy, together with Economy Commissioner Paolo Gentiloni, an Italian, would like to see more sweeping reductions to the Pact’s strictures on debt, Germany’s recognition that the 1/20 rule, under which high-debt states must reduce any excess over 60% of GDP by 5% a year, is no longer realistic in light of much higher Covid borrowing levels, should find favour with the so-called fiscally “frugal” countries, one source said.

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Proposals for reform of the European Union’s fiscal rules published by the German government last week, which make concessions to the need to promote growth and investment, could form the basis for an eventual compromise for overhauling the Stability and Growth Pact, EU officials told MNI.

While countries like Spain and Italy, together with Economy Commissioner Paolo Gentiloni, an Italian, would like to see more sweeping reductions to the Pact’s strictures on debt, Germany’s recognition that the 1/20 rule, under which high-debt states must reduce any excess over 60% of GDP by 5% a year, is no longer realistic in light of much higher Covid borrowing levels, should find favour with the so-called fiscally “frugal” countries, one source said.

Keep reading...Show less