BRUSSELS (Reuters) - Euro zone finance ministers will not set a target for fiscal stimulus for the single currency area next year, the chief of the Eurogroup said on Monday, rejecting a European Commission proposal meant to boost German spending.
With euroscepticism growing in Europe after years of slow growth and persistent unemployment, the Commission proposed in November loosening budget policy for the 19-country euro zone and suggested a fiscal expansion up to 0.5 percent of gross domestic product next year.
In a regular Eurogroup meeting in Brussels, ministers agreed that Germany, the Netherlands and Luxembourg, the EU countries with the highest budget surpluses, should spend more. But the ministers fell short of setting a target for an expansionary fiscal stance for the bloc next year.
“Putting a figure on that or making that a target has not been agreed by the Eurogroup,” Eurogroup President Jeroen Dijsselbloem told a news conference after the meeting.
Germany - the EU’s largest economy - had criticized the Commission proposal, with Finance Minister Wolfgang Schaeuble saying Berlin had already invested much more than the euro zone average in the last decade and refused a hard target.
“For us, what was important was not a figure,” Economic Affairs Commissioner Pierre Moscovici said. He noted that some states had agreed to aim for “slightly expansionary budgets, but without a figure”.
Ministers also reiterated their call on Germany and the other states with a budget surplus to do more to boost demand so as to stimulate growth also in other countries of the bloc.
“Germany, Luxembourg and the Netherlands are over-achieving their MTO (Medium-Term Objective),” the Eurogroup ministers said in a statement released after the meeting in Brussels.
They urged these countries to step up their spending “depending on country specific circumstances, while respecting the medium-term objective, the national budgetary prerogatives and national requirements”.
Additional reporting by Philip Blenkinsop and Alastair Macdonald; editing by Mark Heinrich