The time of free money and low interest rates is over, says French Finance Minister Bruno Le Maire in an interview with several European newspapers, including De Tijd. ‘Linking the price of electricity to the price of gas does not help either the economy or the climate.’
Bruno Le Maire has been leading the negotiations with his European finance colleagues for the past six months. Poland blocked an agreement on a European minimum tax of 15 percent for multinational companies for political reasons. “I am determined to reach an agreement on Friday. All technical problems are gone. It is a question of political will. “
If we want to speed up the process of European integration and make decisive decisions quickly, we must abolish the unanimity rule on tax issues.
European Commission President Ursula von der Leyen approved the recovery plan earlier this month despite strong criticism in the European Parliament. EU finance ministers, including Vincent Van Peteghem (CD&V), are likely to approve the Polish recovery plan on Friday. The Netherlands will abstain.
Hungary, which is still queuing up to approve its recovery plan, is threatening to block the European minimum tax of 15 percent on Friday. Like Warsaw, Budapest demands progress in another international fiscal case for a mechanism to redistribute profits from large digital companies. Consultations on the signing and ratification of an international tax treaty should begin this year. “I trust Janet Yellen’s determination (US Secretary of the Treasury, ed.) and the U.S. administration to respect that timing, “Le Maire said.
Should Europe get rid of fiscal vetoes?
Bruno Le Maire: ‘If we want to speed up the process of European integration and make decisive decisions quickly, we must abolish the unanimity rule on tax issues. France already launched a digital tax in 2018. Otherwise, we would have already approved that plan.
France will chair the EU meetings until the end of June. Did the war in Ukraine hinder these ambitions?
LeMaire: President Emmanuel Macron wants to build a more sovereign Europe, politically, industrially, economically and financially. The war in Ukraine and the new globalization – based on regional value chains – made that agenda more convincing. We have adapted the European model to the world today. We need our own economic model – between Chinese and Americans – with a role for employees, distribution of added value. it must be a model based on innovation, investment and disruptive technology and aimed at protecting our economy on equal terms in the international market. ‘
For the defense, we need to look at how we can finance expenditure at EU level better and in the longer term.
Meanwhile, inflation peaks and spreads widen. How worrying is that?
Le Maire: ‘Everyone should realize that we are entering a new era. The time of free money and low interest rates is over. We are coming out of an unusual period with an average inflation rate of between 0 and 1 percent. Today we are in the middle of a rise in inflation. We must definitely live with an inflation level of more than 2 percent until the end of 2023. ‘
Energy prices are also up.
LeMaire: “It is wrong to link the price of electricity with the price of gas. France and Spain are investing heavily in low-carbon energy. If we want to reduce CO2 emissions, we need access to low-carbon energy at a good price. It is crucial. I share the European Parliament’s ambition to ban internal combustion engines in cars by 2035. But we must not stop at words. Access to low-carbon electricity and its costs are crucial elements. ‘
Should Europe borrow to lower the population’s energy bill?
LeMaire: “Above all, we must show solidarity in Europe, just as during the covid crisis. But the transition to a climate-neutral economy will require hundreds of billions of euros in investment. We must consider all possibilities for financing. We must also look at how we can finance spending at EU level better and in the longer term for defense. ‘
What will France do itself?
LeMaire: ‘Talking about solidarity does not mean that France is shying away from structural reforms. We will protect the population in 2022 and 2023 with targeted, temporary measures. It is my responsibility as Minister of Finance to bring the budget deficit to below 3% of gross domestic product by 2027 and reduce debt by 2026. “