France seeks compromise with Germany over spending rules

France wants to work with Germany to find a compromise over reforming EU spending rules, the French finance minister said Tuesday, raising hopes the bloc could reach agreement by December.

The European Union wants to make its budget rules more flexible and easier to adhere to for member states, but the reforms have pitted France against Germany.

Berlin insists that strict targets for debt and deficit reduction must remain, but Paris believes uniform rules go against the spirit of the reforms, which provide country-specific paths for reducing debt over a longer period.

The EU seeks to reform the Stability and Growth Pact, which demands nations keep debt below 60 percent of gross domestic product and deficit below three percent of GDP.

“Everyone knows that a deal on the new rules… requires a Franco-German agreement,” French Finance Minister Bruno Le Maire told reporters ahead of a meeting of EU finance ministers in Luxembourg where the reforms are at the top of the agenda.

“We will continue to work with Christian Lindner in the weeks ahead to try and find a Franco-German agreement that could serve as the basis for a more general deal,” Le Maire said, referring to his German counterpart.

“Our aim must be to reach an agreement by the end of 2023. It is a question of credibility for the European Union,” he added.

Lindner, however, reiterated Germany’s position Monday, insisting: “We need to see a decline in deficit and debt-to-GDP ratio.”

Le Maire in turn said he wanted to first focus on debt reduction. “We can have an agreement on the level of sustainable debt,” he said.

The rules have been suspended since 2020 due to the need for exceptional spending to respond to the coronavirus pandemic and Russia’s invasion of Ukraine last year, but will be back in force next year.

The European Commission, the EU’s executive arm, wants a deal on its proposal first published in April before the suspension ends.

Despite the divisions, EU economy commissioner Paolo Gentiloni remained optimistic.

“I’m confident that with the engagement of all governments, we will be able to reach this agreement by the end of the year,” Gentiloni told reporters.