VDL braces for internal clash as Austria dismantles ‘debt union’ plans ‘Don’t want repeat’

Austria: Sebastian Kurz discusses future economic plans

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Ursula von der Leyen took a leading role in promoting plans for a common recovery plan to rescue struggling European Union economies following the coronavirus pandemic. Despite threats of rebellion from fiscally conservative member states, the EU ultimately agreed to pool their debt in a bid to secure the eurozone and start pushing for recovery. But Austrian Chancellor Sebastian Kurz already warned similar strategies will not likely be repeated and should not be used to promote the creation of a debt union.

Speaking at GlobSec2021 in Bratislava, Mr Kurz said: “I think it will be enough and I would also say it has to be enough.

“We think it was necessary to invest a lot of money to kickstart the economy.

“But we would not have agreed to a permanent debt union and we do not want to repeat it several times.

“We think it was a tool necessary at this time but nothing we should repeat quite often.”

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Mr Kurz also insisted the fund should not be made to become a permanent feature of the European Union’s response toolkit in time of crisis.

He continued: “There is less skepticism because we agreed on numbers, we agreed on a wider package including rule of law and other criteria.

“We agreed there should be a main focus on investment in digitalisation and also in the green economy which makes our economies more resilient, also, more powerful.

“And last but not least, we’ve agreed it’s a simple tool and not a permanent debt union, which was for us the most important point.”

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Austria has long been part of the so-called Frugal Four alongside Denmark, the Netherlands, and Sweden, and led efforts last year against the recovery fund plan.

Following months of tense negotiation between the EU27, the Four ultimately agreed to sign up to the Merkel-Macron devised strategy but Mr Kurz has recently renewed his appeal to ensure the bloc adheres to its strict budget rules.

Backing the Chancellor, Austria’s Finance Minister Gernot Blümel said earlier this week: “Europe shall not slip into a debt Union

“Creating debts is dangerous, even with low-interest rates.”

Germany, which first proposed the creation of the common fund, has also begun to show signs of a push towards fiscal normality.

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Bundestag President Wolfgang Schäuble has warned the Covid pandemic might be followed by a “debt pandemic” unless the public debt is reduced.

Mr Schäuble said: “The burden of public debt must be reduced. Otherwise, there is a danger that the COVID-19 pandemic will be followed by a ‘debt pandemic’, with dire economic consequences for Europe.

“With their ageing populations, EU countries will struggle to match the US and China in productivity and competitiveness if they allow excessive debt to jeopardise their financial flexibility.

“Thus, all eurozone members must engage in efforts to return to stricter budgetary discipline.”

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