(Bloomberg) — German Chancellor Olaf Scholz called for a “realistic and binding agreement” among European Union member states to reduce debt levels while giving governments leeway to invest.
(Bloomberg) — German Chancellor Olaf Scholz called for a “realistic and binding agreement” among European Union member states to reduce debt levels while giving governments leeway to invest.
“We now need an understanding of how we can reduce the high levels of debt without repeating the mistakes and disputes of the past,” Scholz told a labor conference, making reference to Germany’s history of pursuing austerity policies in the face of resistance from EU allies.
The European Commission outlined legislative proposals in April to revise the bloc’s spending rules, setting up a showdown between Germany and more indebted southern nations as they try to thrash out a new agreement this year. German Finance Minister Christian Lindner has already criticized the Commission’s plan, which balked at his call for stricter debt-reduction benchmarks.
Scholz, who headed the finance portfolio before becoming chancellor, struck a more conciliatory tone, leaving the door open to a compromise deal. Governments must have the ability to act in “times of crisis,” he told a labor conference in Berlin Tuesday.
“We want to make growth and investment possible so that we can master the transformation of our economies,” Scholz said. “But we also stand for fiscal stability in Europe — because this is the only way to ensure that our budgets remain capable of action and we can show solidarity, even in future crises. An unlimited increase in debt would not be a good answer.”
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