Berlin calls Macron's EU debt increase proposal a 'distraction' - Media
Kyiv • UNN
Germany has rejected French President Emmanuel Macron's call for the EU to issue more common debt, calling it a 'distraction'. Berlin emphasizes the need for structural reforms and the completion of the single market.
Germany has rejected French President Emmanuel Macron's call for the EU to issue more joint debt, highlighting deep divisions between the bloc's two largest economies ahead of this week's leaders' summit on competitiveness. This is reported by Euractiv, writes UNN.
Details
According to a senior German diplomat, Macron's proposal "distracts" from what is truly important. "What is really needed now are deep structural reforms and, of course, the completion of the single market."
France strongly supports the idea of common EU debt as a means to bridge Europe's huge investment gap and stimulate the bloc's weak economy, which is struggling to compete with the US and China.
On Tuesday, Macron also noted that common debt could help "question the dominance" of the US dollar, as Donald Trump's attacks on the independence of the US Federal Reserve are forcing investors to seek alternative "safe assets" instead of US Treasury bonds.
The global market is actually increasingly wary of the American dollar. It is looking for alternatives. Let's offer it European debt
Former Italian prime ministers Enrico Letta and Mario Draghi, both of whom will address EU leaders at an informal summit on Thursday, also proposed financing key investments through common debt in their 2024 reports on the EU economy.
However, this idea is strongly rejected by the so-called frugal northern countries, including the Netherlands and Germany. They argue that national budget deficits are already too high, and the previous €577 billion EU joint borrowing scheme for COVID recovery has not yet been repaid.
In the past, EU countries have already used common debt during crises, most recently in the form of a €90 billion loan to support Ukraine.
Threat to the budget
Germany, the largest contributor to the EU budget, has threatened to cut the next seven-year spending plan if it is not reformed to focus on competitiveness and defense instead of agricultural and regional subsidies.
"We hope that the member states that are now calling for new funding will also join these reforms," said the German diplomat.
France fought to maintain farmer subsidies at current levels and opposed some of the reforms.
Repayment of COVID loans is expected to burden the next EU budget by €24 billion per year, "so we actually have little room for maneuver ... and European debt is not free," the diplomat added.