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Germany’s strict fiscal discipline sets an example in Europe, Finance Minister Christian Lindner said Tuesday, as he again rebuffed a proposal for joint EU borrowing to boost the bloc’s competitiveness.
“Germany must lead by example and not only follow its own rules but especially also European rules,” Lindner told lawmakers in Berlin as he unveiled a 2025 draft budget that adheres to self-imposed debt rules.
“What effect would it have if Germany, as the largest economy in the European Union, intentionally broke the European Stability Pact?” he asked. “It would be an invitation for all others to no longer respect these rules.”
Several member states including France and Italy are under pressure from Brussels to get their finances back within EU rules, which demand a budget deficit below three percent of gross domestic product.
Germany has gone further, imposing a “debt brake” that caps annual new borrowing to 0.35 percent of GDP.
Berlin lifted the cap from 2020 to 2023 to weather the fallout from the coronavirus pandemic and Russia’s war in Ukraine, but Lindner reinstated the debt brake last year and aims to maintain it in 2025 despite a struggling economy.
Lindner, whose pro-business FDP party champions fiscal rigour, also reiterated his opposition to a call for joint EU borrowing as unveiled in a report by former European Central Bank President Mario Draghi on Monday.
Shared borrowing “could lead to the overall debt level in the European Union being too high”, Lindner said.
“Each individual member state of the European Union must continue to bear responsibility for their own public finances,” he added.
Draghi’s report calls for additional yearly investment of at least 750 billion to 800 billion euros ($830-$885 billion) if the EU wants to keep pace with the United States and avoid dependence on China.
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