• Germany's news in English

Schäuble ramps up threat against big deficits

The Local · 27 Sep 2010, 14:42

Published: 27 Sep 2010 14:42 GMT+02:00

Facebook Twitter Google+ reddit

Germany launched the opening salvo in intense negotiations between European Union finance ministers meeting in Brussels as part of a task force looking into ways to strengthen the 27-nation bloc's fiscal discipline.

The moves to punish budget-busting nations came as trade unions prepared to lead demonstrations in Brussels and other parts of Europe on Wednesday to protest austerity measures launched by EU states to bring down huge public deficits.

In a letter to his EU counterparts, German Finance Minister Wolfgang Schäuble said he "chiefly supports" tough proposals, including fines against deficit sinners, to be unveiled by the European Commission on Wednesday.

Schäuble backed measures to give the EU's Stability and Growth Pact "more bite" by speeding up the penalty process and imposing sanctions on a "quasi-automatic" basis.

Nearly every EU state exceeds the pact's deficit limit of 3.0 percent of GDP, but the path towards penalties is long and the bloc has never imposed sanctions against any state.

Pressure to tighten EU rules rose after a massive fiscal crisis in Greece forced the eurozone to bail out Athens in May and led to the creation of a €750 billion warchest to prop up any other weak member state.

The Greek debt crisis was followed by a wave of austerity measures across Europe, which has caused discontent.

Spain, which is slashing spending to reassure the markets, is bracing for a strike on Wednesday while protests will take place in other European capitals, including 100,000 people expected in the streets of Brussels.

Despite the social unrest, Brussels wants to twist the arms of states that fail to curtail spending.

European Economic Affairs Commissioner Olli Rehn wants the sanctions to kick in semi-automatically, with penalties only avoided if a majority vote against them.

One proposal being considered by the commission would force rule-breakers to deposit the equivalent of 0.2 percent of their gross domestic product, an amount that would be converted into a fine if corrective measures were not taken, EU sources said.

Another measure would punish countries that surpass the EU's debt ceiling of 60 percent of GDP by forcing them to slash the excess by five percent each year for three years.

The commission also wants to smooth out cross-border imbalances, with sources talking of possible fines running to 0.1 percent of GDP for countries that fail to meet targets aimed at bringing up the rear.

In his letter and a position paper, Schäuble called for the suspension of voting rights and the freezing of EU development and farm aid funds for countries that fail to respect the rules.

Story continues below…

"The creation of stronger incentives to prevent and correct excessive government deficits stands at the very core of our endeavours to enforce fiscal and economy governance in the EU," he wrote.

Schäuble and other finance ministers will air their views within the task force on cross-border economic governance chaired on Monday evening by EU President Herman Van Rompuy.

Set up by national leaders, it is due to present its own findings at a summit next month.

The panel has struggled on sanctions so far, with ideas for cutting future aid for poorer regions hitting opposition notably among ex-Communist eastern European states.

The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

18:37 September 27, 2010 by vonSchwerin
Germany is now going to get serious about the Stability and Growth Pact? Schäuble supports "imposing sanctions on a 'quasi-automatic' basis"?

This is nearly 10 years too late! And several of the EEC founder states -- core members of the EU -- were among the worst offenders in the 2000s. Now they want to make things hard for the smaller economies?
Today's headlines
Deutsche Bank reports surprise quarter billion profit
Photo: DPA

Troubled German lender Deutsche Bank reported Thursday a surprise €256-million profit in the third quarter, compared with a loss of more than six billion in the same period last year.

US 'warned Merkel' against Chinese takeover of tech firm
Aixtron HQ. Photo: DPA

The German government withdrew its approval for a Chinese firm to purchase Aixtron, which makes semiconductor equipment, after the US secret services raised security concerns, a German media report said Wednesday.

Long-vanished German car brand joins electric race
Photo: DPA

Cars bearing the stamp of once-defunct manufacturer Borgward will once again roll off an assembly line in north Germany from 2018, the firm said Wednesday.

Eurowings cabin crew union to strike all day Thursday
Photo: DPA.

UPDATE: A union representing cabin crews on Lufthansa's budget airline Eurowings has announced that strikes will last all day Thursday as ongoing contract negotiations continue to falter.

Hesse hopes to set example by building Iraqi orphanages
Refugee children in northern Iraq. Photo: DPA

The wealthy central German state of Hesse has set aside €1 million to build a school, family homes and an orphanage in northern Iraq, in an effort to help refugees there.

The Local List
10 German clichés that foreigners get very wrong
David Hasselhoff. Photo: DPA

Whether it be efficiency, humourlessness or a love of a certain Baywatch star, there are many cliches stuck in the heads of foreigners about Germany. But how true are they?

Fake Germanwings victim relative convicted in Cologne
A torn piece of metal at the crash site in 2015. Photo: DPA

A German court on Wednesday gave a woman a year's suspended jail sentence for posing as the cousin of a victim in last year's Germanwings plane crash and obtaining compensation offered by the airline.

Couple accused of torturing, murdering women go on trial
The so-called 'house of horrors' in Höxter where the couple allegedly tortured and killed women. Photo: DPA.

A couple accused of luring women to their village home with personal ads started trial on Wednesday over charges that they tortured and killed at least two of their victims.

After July attacks, govt drafts new video surveillance law
Photo: DPA

The Interior Ministry is drafting a law which will enable public spaces to be filmed for surveillance purposes as a reaction to deadly attacks in July, according to a newspaper report.

Merkel: murky internet giants distort perception of reality
Angela Merkel. Photo: DPA.

Chancellor Angela Merkel called on Tuesday for internet giants to make public their closely-guarded algorithms, claiming that they are not giving people diverse enough information.

10 ways German completely messes up your English
Sponsored Article
Last chance to vote absentee in the US elections
Germany's 10 most weird and wonderful landmarks
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
jobs available
Toytown Germany
Germany's English-speaking crowd