Finance ministers fail to strike EU spending rules deal after hours of talks

BRUSSELS ― EU finance ministers failed to agree on a reform of the bloc’s national spending rules as a meeting in Brussels broke up at about 3 a.m. on Friday without finding a compromise.
Ministers made progress but the two camps ― frugal countries led by Germany and more profligate governments such as the French and Italians ― disagreed on several technical details around the pace at which countries would have to reduce spending, despite months of negotiations. The current version of the Stability and Growth Pact, suspended since 2020, is considered too strict and barely enforceable.
They will meet again to try to get a deal, probably in Brussels one day between December 19-21.
“Tonight we have made essential progress on the reform of European budgetary rules, thanks in particular to the Spanish presidency [of the EU],” French Finance Minister Bruno Le Maire said at the end of the meeting. “An agreement in the Council should be possible before the end of the year. We continue!”
Another EU diplomat was less positive, saying earlier in the night that “each of the 27 countries expressed a different opinion and different demands” and raising questions about the way in which discussions had been conducted.
Germany and other likeminded countries had been insisting on stricter rules for highly-indebted countries, requiring them to cut their annual deficits ― the difference between spending and revenue ― at a faster pace. France and other southern countries called for greater flexibility.
Officials described the night’s progress as allowing the finance ministers of Germany and France to go home satisfied. The challenge now would be to convince the other countries on their side.
“It was a long but not a hard and controversial night,” German Finance Minister Christian Lindner said, adding that disagreement remain over how much flexibility countries should have when in an excessive deficit procedure ― the European Commission’s process for policing countries with excessive debt or deficit. For Germany, it’s a no-brainer. “We’re convinced excessive deficits have to be reduced not to be excused.”
Speaking to reporters on Friday morning, Germany’s finance chief rejected French demands to make more room for investments.
He even disagreed with his French colleague’s assertion that EU ministers agreed on 95 percent of the agreement. “We were coming from 90 percent and I think this morning we are at 92,” Lindner told reporters.
For France, countries facing a excessive deficit procedure, which will probably include France and Italy in 2024, should be allowed to cut spending more slowly, provided that they justify they are investing in a list of identified strategic sectors and making structural reforms.
Earlier this week, officials from Spain circulated a compromise text aimed at finding a middle ground between the two camps. The proposal, which served as a negotiation basis for the dinner talks, required highly-indebted countries to keep their annual deficits at about 1.5 percent of GDP and reduce debt by at least 1 percent of their GDP every year. 
But the Spanish mediation proved to be insufficient.
“We have made a lot of progress today,” said a spokesperson for the Spanish EU presidency. “This is a challenging negotiation, and we are getting there.” They said work would continue “in the coming days.”
Already on Thursday morning Le Maire hinted at Paris and Berlin being not yet on the same page on how fast high-indebted countries should cut spending.
As before, the rules will still require countries to bring their budget deficits to below 3 percent of GDP and limit their debt to 60 percent of GDP. Rules were suspended in 2020 to allow countries to fight the economic consequences of the COVID pandemic and remained on ice until the end of this year. 
A French economy ministry official said a new compromise text by France, Germany, Italy and the Spanish EU presidency will serve as basis of new discussions. An official familiar with the file suggested that countries under an excessive deficit procedure could be allowed to reduce their deficit more slowly but only for a limited amount of time, from 2025 to 2027. 
“The differences are only in details ― in general, we all look quite aligned,” Slovene Finance Minister Klemen Boštjančič said.