Stability and Growth Pact: EU debt rules: Brussels is waiting for Berlin’s budget

Despite the government crisis in Berlin, the EU Commission expects Germany’s medium-term budget plan in the coming weeks. “We are of course following the discussions in Germany and the German coalition about the medium-term financial structure plan and are in constant contact with the German authorities,” said EU Commission Vice President Valdis Dombrovskis after a meeting with the EU finance ministers in Brussels. “We hope to receive Germany’s medium-term financial plan by the end of the month.” However, Berlin is currently still working on the 2025 budget and the supplementary budget for 2024. Federal Finance Minister Christian Lindner (FDP) was represented at the meeting by his State Secretary Heiko Thoms.

To ensure sound finances in accordance with European debt rules, each country must draw up a four-year budget plan together with the EU Commission. This should actually have been submitted by mid-October. However, Germany – like five other countries according to the EU Commission – has not yet done this.

Debt rules apply to all EU countries

The European debt rules, also known as the Stability and Growth Pact, apply to all EU member states. The rules stipulate, among other things, that the debt level of a member state must not exceed 60 percent of economic output. At the same time, the general government financing deficit must be kept below three percent of gross domestic product (GDP). Anyone who crosses the borders risks criminal proceedings.

In mid-October, Germany signaled in Brussels that it needed more time to adjust spending due to the poor economic situation. Instead of a four-year plan, the Federal Republic could, under certain conditions, draw up a seven-year budget plan. When asked whether Germany, as a large EU member state, could do whatever it wanted on a fiscal level, Dombrovskis answered with a clear “no.”