Wolfgang Schäuble doubles down on EU spending rules

Posted on November 18, 2016

The eurozone should not deviate from its strict debt and deficit rules, Germany’s influential finance minister has said, criticising Brussels’ latest attempts to boost growth by easing up on austerity.

Wolfgang Schäuble, Berlin’s veteran finance chief, said the European Commission’s push to loosen the bloc’s fiscal stance by 0.5 per cent of GDP next year was evidence of it acting “politically” and “beyond its mandate”, according to Reuters.

Mr Schäuble said governments should stick to the eurozone’s “Stability & Growth Pact” which limits public debt at 60 per cent of GDP and budget deficits of no more than 3 per cent of GDP. The rules were toughened up in the wake of the eurozone crisis to rein in public finances in high spending countries.

Speaking at an event hosted by Süddeutsche Zeitung on Friday, the Christian Democrat politician warned the commission had “no authority” to give member states greater discretion over national spending.

Instead, Berlin has supported an attempt to set up an independent fiscal body to monitor public finances in the 19-country bloc rather than handing more oversight to the commission.

After years of low growth and low inflation, Brussels has said “there is a case for a significantly more positive fiscal stance for the euro area”.

“While there has been significant progress in recent years in the euro area, the recovery is still not accelerating, there is still significant unused capacity in labour and capital and uncertainty is high”, the commission said in its latest budgetary outlook this week.

Mr Schäuble added the world was moving towards the next economic crisis and asset price bubble “if we don’t watch out”.

Image courtesy of DPA

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