Last week, the German Finance Minister Olaf Scholz and his French colleague Bruno Le Maire agreed on a compromise proposal for a eurozone budgetary instrument. The new budget is to be anchored in the EU-budget and open to countries joining the eurozone. The funds will come from the euro countries, possibly from revenues from a financial transaction tax or from the EU budget. The eurozone budget is intended to promote national reforms and investments from the recommendations of the European Semester, which contribute to more convergence and competitiveness of the eurozone. Emmanuel Macron had originally proposed a much larger eurozone budget that could counteract an economic downturn with investments in the event of a crisis and act as a “macroeconomic stabiliser” through a common corporate tax. In the Meseberg Declaration, Germany and France had agreed on the first cornerstones of a eurozone budget. Even the Meseberg Declaration lagged far behind France’s proposals, but still demanded a genuine stabilising function of the eurozone budget. Germany and France have now in fact buried the stabilisation in their more detailed elaboration. Some newspapers have already reported on this leak, which we are making available to a wider public.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“Scholz’s and Le Maire’s proposal for a eurozone budget is merely an alibi stabilisation. The German government continues to aimlessly wander about with its eurozone politics by shrinking France’s proposals beyond recognition. The coalition agreement announced a new European policy, but delivers the well-known blockade policy against a common financial policy in the eurozone. The substance of the paper are well-known structural reforms with German handwriting, while an effective macroeconomic stabilisation is missing. The paper merely serves to save face of those involved. The original idea of genuine automatic stabilisers is announced, but not delivered. This Franco-German eurozone budget will not make the eurozone crisis-proof.
It is a misleading redefinition of the term stabilisation if it means absorbing economic shocks through the mobility of labour and resilience of the financial sector. The added value of the proposed budget is doubtful, because existing programmes such as the Juncker Plan, the Structural Funds and programmes currently under discussion such as InvestEU and the Reform Support Programme fulfil comparable objectives”.
Link to the Leak of the Franco-German proposal: https://sven-giegold.de/wp-content/uploads/2019/02/French-German-Contribution-on-a-Eurozone-Budgetary-Instrument.pdf