EU, white smoke in the Stability Pact: the announcement from France and Germany

There will be an agreement on the Stability Pact. The announcement came from Paris, where French Finance Minister Bruno Le Maire and German Minister Christian Lindner met on the eve of the extraordinary Ecofin meeting on Wednesday 20 December. «Tonight there should be a 100% agreement between France and Germany on these new rules of the Stability Pact, it is excellent news for all European states», noted Le Maire, recalling that «for the first time since the creation of the “euro” we will have “a true Stability and Growth Pact”. Yes, therefore, to the determination to consolidate public finances, to accelerate debt reduction and to reduce deficits, but at the same time also yes to a growth pact. The Franco-German axis managed to break the impasse that threatened to compromise the objective of reaching an agreement by the end of the year. And Italy is also on board. Both Paris and Berlin report having heard from Minister Giancarlo Giorgetti: «We worked a lot with our Italian friends. I think we are exactly on the same page as Italy and it is also very good news that France, Germany and Italy are finally aligned”, exclaimed Le Maire. «We had a conversation with our Italian colleague. I am confident that it will be possible to reach a political agreement at tomorrow’s extraordinary meeting”, added Lindner.

Now it is a question of extending the agreement to the remaining EU countries, but in fact France and Germany embodied the two positions in force in Europe, respectively the party of support for investments and the one of strict public finances. There are still no technical details to be defined, namely about the “preventive arm”, which guarantees sustainable budgetary policies through the achievement of a medium-term budgetary objective. The agreement, however, seems achievable, so much so that the rotating Spanish presidency of the EU Council has scheduled a brief meeting, starting at 4 pm, and a conference at 6 pm. As for the comments Giorgetti made regarding the videoconferencing method, the presidency explains that this was done to allow for the broadest possible participation of ministers, given the numerous budgetary deadlines at national level. In the last Ecofin of December 8, the one that should have been decisive and ended in nothing, France managed to convince the Germans to accept a transitional phase in the deficit adjustment trajectories of 0.5% per year that took interest into account paid for expenditure in strategic sectors for the EU (defence, green and digital transition) for a period of three years (2025, 2026 and 2027). «A step in the right direction» for Minister Giorgetti, but not enough. Tomorrow we will better understand how much remains of this size.

Last week, Prime Minister Giorgia Meloni tried to create a common front with French President Emmanuel Macron, with whom she had a long bilateral meeting in Brussels, but upon leaving the European Council summit she noted that positions in the EU “were still far apart ». Now the turning point, with the balance achieved between the need to guarantee investments and the need to safeguard the stability of public finances, with the reduction of deficit and debt. For Germany, “strict, credible and efficient rules are needed” on deficit and debt levels, Lindner stressed, and “it is important that the rules are not just on paper, but that they are actually respected and that is why we agreed which are these minimum requirements, which everyone must respect.” The green light for the agreement is therefore expected tomorrow to then begin the EU approval process. In any case, the Commission excluded the hypotheses released in the last few hours of a possible extension of the safeguard clause, which suspended the pandemic Stability Pact.