German Finance Minister Olaf Scholz said on Wednesday 2 September that the economic crisis will continue to rage into 2021 and will require exceptional budgetary solidarity measures.
“The economic situation is serious” and “will not end this year”, the consequences of the Covid-19 pandemic could therefore divide Member States, the current President of the Ecofin Council told the European Parliament’s Committee on Economic and Monetary Affairs. Hence the importance, according to Mr Scholz, of demonstrating that Europe has chosen the path of “solidarity” by freezing European fiscal rules until further notice and adopting a European Recovery Plan based on common debt.
He also added, “What we’re doing now is a very expansive policy. In years of plenty, serious management is needed to have the funds set aside for times of crisis.”
Asked by Martin Schirdewan (GUE/NGL, Germany) about a reform of the Stability and Growth Pact to take account of Member States’ rising debt levels, the German Minister highlighted the solution found with the European Recovery Plan, which will give grants to Member States, especially the countries most affected by the pandemic, such as Italy and Spain, to help them get their economies back on track. They will reimburse these funds only up to the amount of their national contribution to the EU budget.
“No country will find it difficult to finance the measures needed to tackle the crisis. We’ll be able to refinance ourselves on the capital markets. Subsidies are a way out of the impasse”, Mr Scholz said.
The German Social Democrat called for all the legislation to implement the European Recovery Plan, such as the Regulation establishing the Recovery and Resilience Facility (see other news), to be finalised by the end of the German EU Council Presidency. This will enable the first EU grants to be awarded to Member States as of the beginning of 2021.
Jonas Fernández also asked him what room for manoeuvre the German Presidency had to negotiate with the European Parliament on this Facility, the budgetary instrument at the heart of the European Recovery Plan. “Everyone brings their own contribution”, Mr Scholz promised.
Several MEPs, such as Luis Garicano (Renew Europe, Spain) and Lídia Pereira (EPP, Portugal), expressed concern about the EU Council’s lack of movement on the creation of new own resources in the EU budget (see EUROPE 12550/1). In an optimistic mood, the German Minister underlined the decisive step taken with the agreement of the European Council on 21 July. He said the tax on non-recycled plastic waste, which will feed into the EU budget from 2021, will be “fairly quick to implement”, as it will be “a contribution from the Member States’ budgets”.
Taxation. On taxation, Mr Scholz again advocated the introduction of a financial transaction tax (see EUROPE 12408/3) at EU level, which could be used for economic recovery.
“I am deeply convinced that it is sensible”, said the Minister, pointing out that “countries that would not fully understand why they should participate will understand when they see that the benefits in terms of own resources would accrue to them as well”.
In his view, the Covid-19 crisis could in fact speed up decision-making on this issue, which has been discussed in the form of enhanced cooperation for years. “When there is pressure, you reach a solution more easily”, he replied to Mr Schirdewan, who asked him about the timetable for the introduction of such a tax.
Digital taxation and minimum business taxation remain “two extremely pressing issues” for the German Presidency, he assured MEPs. The German Minister hopes for progress at the OECD in the autumn (see EUROPE 12545/19).
Mr Scholz, on the other hand, did not make any promises on the proposal for tax transparency, ‘country-by-country reporting’ (CBCR). Asked by Sven Giegold (Greens/EFA, Germany) whether Germany had changed its position, he said that his government had not yet taken a decision on the issue.
“I personally think it’s a very useful tool”, he added, without however committing himself to a new vote in the Council of the EU (see EUROPE 12384/3).
Money laundering. In the fight against money laundering, Mr Scholz felt that further progress needed to be made, with a particular focus on cryptocurrencies and ‘stablecoins’. He has argued in favour of an EU-level supervisory structure in this area.
Reacting to these comments, Markus Ferber (EPP, Germany) said that the shortcomings of the German Financial Intelligence Unit in the ‘Wirecard’ case (see EUROPE 12535/15) cast doubt on the credibility of the Minister’s stated ambition to combat money laundering at EU level. The Bundestag will set up a commission of inquiry to shed light on this scandal and the shortcomings in supervision. (Original version in French by Mathieu Bion and Marion Fontana)