Macron: Expert discusses ‘European Project’
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Austria is seeking alliances to fight back against the EU’s loosening deficit rules, with Austrian finance minister Gernot Blümel calling on countries to “act together”. Talks on the controversial reform on public spending are due to launch in just a few months, and Austria is bracing for a battle.
Mr Blümel wrote to neighbouring Northern European countries in June to a private meeting that would discuss a potential alliance.
In the letter, which was sent to countries including the Netherlands and the Baltics he wrote: “We should act together and form an alliance which ensures a Europe which is based on sound fiscal policies and fiscal sustainability.”
“I am convinced, that we should strive for a tight exchange and close cooperation both internally in the relevant Council sessions and externally in communicating our common vision on the future of EU fiscal policy.”
Now two months on, Mr Blümel is bolstering his plans, dubbing the EU’s push for more flexibility around public spending “a high-risk gamble”.
Austria is going to war with Italy, Spain & France…and EU should be worried (Image: GETTY/ PA)
Talks over reforming the complicated public spending rules and allowing more flexibility are due to resume in the autumn.
Speaking to Politico, Mr Blümel said: “This hypothesis [assumes] that there will not be any difficult economic situations in the future” which he said is “just not the case.”
Current rules are on hold until 2023 due to the upheaval of the coronavirus pandemic.
They limit budget deficit at three percent of economic output and aim to cap public debt at 60 percent.
EU warning: Mr Blümel is bolstering his plans, dubbing the EU’s push for more flexibility around public spending ‘a high-risk gamble’ (Image: GETTY)
However, talks in the autumn are facing a push from Spain, France and Italy to ease the rules – something which has thrown up debate worldwide.
Spain announced in April it would continue to post higher budget deficits than the EU’s fiscal rules allow through 2024.
Spain’s budget minister Maria Jesus Montero said she was looking to extend the current EU fiscal rule suspension.
Now Austria is looking for allies to counter the initiative from France, Italy and Spain.
Hand in hand with overhauling deficit rules is how the EU sees the future, following a devastating and expensive pandemic.
Countries seeking a change to the rules say it would reduce pressure on countries with mounting debts.
They call for environmental spending and green initiatives to be granted a “free pass”.
However, Austria is leading the calls against change.
EU warning: Talks in the autumn are facing a push from Spain, France and Italy to ease the rules (Image: PA)
Mr Blümel told Politico: “I don’t think that this is a feasible solution.”
He cautioned the current borrowing rates won’t remain low in the future.
The Austrian financial minister added: “In the end, it’s how the markets evaluate lending to you, and you won’t reduce the risk by doing artistical calculations.”
Debt across the Eurozone has surpassed 100 percent of its economic output.
Countries with the highest levels include France, Cyprus, Greece, Italy, Spain and Portugal.
In another hit back at the Bloc, Mr Blümel opposed plans the EU Commission announced for a limit of €10,000 on cash payments to tackle money laundering
Announcing the initiative Mairead McGuinness, Commissioner responsible for financial services, financial stability and Capital Markets Union said: “Money laundering poses a clear and present threat to citizens, democratic institutions, and the financial system.
“The scale of the problem cannot be underestimated and the loopholes that criminals can exploit need to be closed. Today’s package significantly ramps up our efforts to stop dirty money being washed through the financial system.
“We are increasing coordination and cooperation between authorities in member states, and creating a new EU AML authority.
“These measures will help us protect the integrity of the financial system and the single market.”
However, Mr Blümel said Austria rejected installing an upper limit, saying cash gives citizens a feeling of security.