With the reform of the debt rules, a central European political challenge awaits him.
(Photo: ddp / Andreas Gora)
The signals from Paris are clear: the French government is preparing to reform the rules for national debt and deficits in the euro zone. Macron sees an important ally in Italy’s Prime Minister Mario Draghi. The EU Commission has started its first consultations on the Stability and Growth Pact, and when it started in October, the European Monetary Commissioner Paolo Gentiloni also called on Germany in particular to engage in a “taboo-free” debate.
At the end of the process, there could be a far-reaching restructuring of the fiscal framework in the EU and the euro zone. A difficult task awaits Olaf Scholz: The next Chancellor must ensure the solidity of the common currency and at the same time prevent a split in the euro zone.
The European debt rules are suspended until 2023 due to the consequences of the pandemic. The limit of 60 percent of gross domestic product for national debt is a long way off for a number of member states, including France and Italy. Paris and Rome, which are currently strengthening their partnership, will not allow themselves to be pushed into a tough austerity course.
The economic shocks that radical fiscal policy cures would trigger in the EU’s second and third largest economies would also pose a threat to the entire European economy.
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Scholz should aggressively address the debt rules during his planned visit to Paris
The need for reform cannot be ignored. However, Scholz cannot leave the proposals for changed rules to France alone. He should address the sensitive issue aggressively on the first trip after the chancellor election, which will traditionally take him to Paris.
Scholz has to make more indebted countries an offer that gives them more time in restructuring their public finances and the necessary leeway for future investments. At the same time, however, he must ensure that there are binding plans to consolidate the budget. The stability goals for the euro must not be undermined. Only in this way will Scholz be able to win the thrift-conscious Northern Europeans to a compromise.
More: France and Italy could put their stamps on the EU in the post-Merkel era – and push for a reform of the debt rules