(Bloomberg) -- German Economy Minister Peter Altmaier poured cold water on a French proposal to give the European Union a lasting tool to raise common debt.
France intends to push for a permanent mechanism on joint EU debt issuance to drive investment in innovation that member countries can't finance on their own, according to Finance Minister Bruno Le Maire.
The comments came ahead of a meeting between the ministers of Europe's biggest economies on Sunday at an annual conference in Aix-en-Provence, southern France. Asked about the initiative, the German official expressed reluctance.
“It will take some years to spend the 750-billion-euro debt we have,” Altmaier told reporters following a joint panel with Le Maire. “The next steps will come after Bundestag elections and French presidential elections.”
The European Union in May 2020 took the unprecedented step of jointly raising 750 billion euros ($890 billion) for economic recovery from the coronavirus pandemic. The move allowed some countries to borrow funds at lower rates than they could have obtained on their own.
Since then, French President Emmanuel Macron, whose mandate ends in May 2022, has warned that the EU's recovery could trail behind the U.S. He's called for a “more vigorous answer” from Europe that would include talks on improving the debt mechanism for “stronger and faster” investment.
The proposal met opposition from many EU members, including the Netherlands and Germany, which is heading toward elections in September. To get last year's agreement on joint debt, France conceded that it would be temporary, yet French officials view a lasting mechanism as a step toward deeper EU integration.
“For the biggest investments, particularly in energy transition, we propose that the joint issuance of debt used to finance the 750 billion euro recovery fund becomes a permanent European financing system,” Le Maire told Le Parisien newspaper in an interview published on Saturday.
The new initiative could come with limitations on how much governments can spend, he said.
Altmaier said debate on a permanent plan would be interesting from an academic and economic point of view.
For now, though, Europeans must focus on “concrete issues” such as large-scale industrial projects in areas like batteries for electric vehicles, hydrogen or health, he said. France and Germany could map out a plan for health cooperation by September.
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