Quantcast
Germany's Scholz: Europe's fiscal rules are flexible enough - Metro US

Germany’s Scholz: Europe’s fiscal rules are flexible enough

FILE PHOTO: German Finance Minister Olaf Scholz reacts during a news conference in Berlin

BERLIN (Reuters) – The COVID-19 pandemic has shown that the European Union’s budget rules are flexible enough to allow massive fiscal spending, and that will remain the case in any future crisis, German Finance Minister Olaf Scholz said on Monday.

Asked ahead of a virtual meeting with other euro zone finance ministers whether he expected a discussion about changes to the EU’s Stability and Growth Pact, Scholz said member states should be pragmatic and focus on the existing possibilities to deviate from the rules under certain circumstances.

“The fiscal pact has shown its flexibility right now during the crisis and I am sure that it will do so also in the future,” Scholz said.

The European Commission will propose towards the end of the year how to simplify the EU’s complex budget rules. A revision of the rules started early last year, but was suspended because of the pandemic. Brussels now wants to resume the review once the post-pandemic recovery takes hold.

“It’s important that you first proceed in a very pragmatic way and focus on the flexibility you have,” Scholz said. He also cautioned against any premature tightening of fiscal spending.

“It would be a big mistake if we would have large economic cliffs which would mean that the fledgling upswing … would be stopped because we couldn’t counter the impact as planned. I think everyone understands this,” Scholz said.

German officials have said Scholz has little appetite to start a lengthy debate about reforming EU’s fiscal rules. He doubts all member states could unanimously agree on new guiding principles.

Scholz is running as the Social Democrats candidate for chancellor at the federal election in September, when conservative leader Angela Merkel will end her fourth and final term in office.

(Reporting by Michael Nienaber; editing by Paul Carrel, Larry King)

More from our Sister Sites