Sunday

1st May 2016

Germany to EU: stop talking about new budget schemes

  • A special budget would not solve the euro-crisis, says German official (Photo: PeterXIII)

German officials are in eye-rolling mode ahead of an EU summit about plans to create a eurozone "shock absorption fund" and say leaders should focus on reforms and stick to their promises.

"I am honestly a little surprised that everyone is just talking about how to spend money, but not about what matters: to increase competitiveness and employment," a senior German official told journalists in Berlin on Wednesday (12 December).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

A eurozone-only budget "would not solve the crisis, nor its root problems," the source added.

The idea of a "shock absorption fund" to offset the negative impact of economic crises for countries in the euro-area who cannot devalue their currencies was tabled by EU council chief Herman Van Rompuy in his latest proposals for the future of the eurozone.

But the German government is insisting that first more controls on national budgets need to be in place, in what Van Rompuy dubbed "contractual agreements" signed by member states.

Here too, there is no final concept yet on how these agreements would be implemented, at what stage stronger supervision would kick in and who would be the arbiter - the European Court of Justice being one option.

"About this fiscal capacity, it would be wrong to try and undermine one part what we are trying to establish on the other - more economic coordination and fiscal supervision. So there is no point now to think about anti-cyclical giant capacities," the official said.

Instead of trying to create new funding schemes that pose legal challenges, the existing EU budget should be better used and the pace of structural reforms kept, the official said.

However, back in June when EU leaders first floated the idea of a eurozone budget, Germany was more favourable of various forms of "solidarity" with the crisis-plagued countries in the eurozone.

The pressure has been lifted since, because the European Central Bank in August announced it would purchase "unlimited" amounts of government bonds from countries under market pressure, if they sign up to reforms plans.

Borrowing costs dropped and the pressure on EU leaders to agree on anything this week has virtually disappeared.

Even the German government, once a proponent of revamping euro-architecture, including via treaty change, is now admitting the time is not ripe for such discussions.

"We need to see how full the agenda since August was - banking union, EU multi-annual budget, efforts related to Greece. So perhaps it is human that the question of the mid-term future of the eurozone is not being now dealt with the intensity and the focus we would have liked," the official said.

A change to the EU treaties is "not off the table" but first leaders have to agree on the "content" of the changes and only later on the legal instruments to do so, the source explained. That process will take another "four to six months."

Investigation

VW will not publish emissions cheat report

Volkswagen said it would keep its preliminary report into the emissions scandal secret because publishing it would “present an unacceptable risk” to the firm.

News in Brief

  1. Netherlands funds €1.3mn Russian media project
  2. Fake euros network dismantled in Bulgaria
  3. Inflation negative in eurozone in April
  4. EU economy registers 0.5% growth in first quarter
  5. Eurovision says No to Kosovo, Palestine, IS flags
  6. EU to decide on future of tobacco agreement 'soon'
  7. Russia blames Sweden for frosty relations
  8. UN chief warns of 'growing xenophobia' in Europe

Stakeholders' Highlights

  1. European Roundtable of IndustrialistsDigitising European Industry
  2. Counter BalanceParliament Gets Tough on Control EU Bank's Funds
  3. ICRCSyria: Aleppo on the Brink of Humanitarian Disaster
  4. CESIWorld Day For Health and Safety at Work: Public Sector Workers in The Focus
  5. EFABasque Peace Process-Arnaldo Otegi Visits the European Parliament
  6. EscardioChina Pays Price of Western Lifestyle With Soaring Childhood Obesity
  7. Centre Maurits CoppetiersThe Existence of a State is a Question of Fact, Not a Question of Law
  8. Martens CentreJoin Us at The Event: Prospects For EU Enlargement After 2019
  9. ICRCSyria: Aid for Over 120,000 People Arrives in Besieged Town Near Homs
  10. Counter BalanceHighway to Hell: European Money Fuelling Controversial Infrastructure Projects
  11. EPSUResponds To Reported €300 Million McDonald’s Tax Bill in France
  12. Access NowAcademics and Privacy Groups Ask Obama to Reject Anti-encryption Law

Latest News

  1. EU roaming charge cut enters UK referendum campaign
  2. EU fiscal rules, migrants and Belgium's trick
  3. EU should call out Bangladesh on workers' rights
  4. Kosovo: Living in a ghetto on the EU fringe
  5. War crimes law poisons Serbia accession talks
  6. Italy and Austria try to calm tensions on Alpine pass
  7. French MPs call to lift Russia sanctions
  8. EU sides with embattled Greek PM in bailout talks