Review the Maastricht parameters: forget it. Word of Germany
The new chief economic advisor to the German finance minister, Lars Feld, a well-known German economist, recently expressed his opinion on the possibility of changing the Maastricht parameters, as reported by another well-known economist, prof. Heimberger
finance minister's chief econ adviser Feld reaffirms: no change of 3% / 60% Maastricht criteria; countries with high public-debt-to-GDP ratios must bring them down quickly; only some openness on minor tweaking of the debt reduction rule. pic.twitter.com/1ChkHepE7b
– Philipp Heimberger (@heimbergecon) February 17, 2022
What did Lars Feld say?
The negotiation of a reform of the European debt rules is underway in Brussels. What changes do you think are acceptable?
The Maastricht limits – three per cent of gross domestic product for the deficit and 60 per cent for the level of debt – are absolutely not negotiable.
There is no need to talk about it, because changing the EU treaties is completely unrealistic.
Then consider possible ways to counter the desire for a relaxation of the rules? The question, in my opinion, does not correctly describe the initial situation. Anyone who has excessive public debt and wants to change the guidelines at all costs must offer something. In my opinion, these countries need to explain in a very credible way how they intend to reduce their debt ratios . We can therefore certainly talk about details, such as the rule that the debt level must be reduced to 6O percent within 20 years.
So to be extremely clear:
- anyone who thinks they can renegotiate the Maastricht treaties is, frankly, deluded;
- On the contrary, Germany will seek "compelling explanations" from countries with debt-to-GDP ratios above 60% of how they intend to reduce their debt to this value.
For us this is a 95% reduction in GDP debt / GDP. Even divided by 20 years, it is a matter of committing to making primary surpluses of the order of 4% every year, for 20 years. A realistic request, if you want to turn the peninsula into a desert, among other things while repaying the debt linked to the Recovery Fund.
Perhaps the insistence on this rigidity can be the salvation of Europe.
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The article Reviewing the Maastricht Parameters: Forget It. Word of Germany comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/rivedere-i-parametri-di-maastricht-scordatevelo-parola-di-germania/ on Sat, 19 Feb 2022 16:03:52 +0000.