European Commissioner Gentiloni: “The Coming Winter Could Be One of the Worst in History”

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DER SPIEGEL: You are referring to the rule according to which countries with high debt loads must pay down a twentieth of their debt above 60 percent of GDP each year …

Gentiloni: Precisely. This rule cannot be applied because it would force harsh austerity measures in some cases. The fact that Berlin agrees is a good starting point for further debate.

DER SPIEGEL: On the other hand, the German government is opposed to your plan allowing the Commission to negotiate budgetary policy specifics with member states. Are you still committed to that proposal?

Gentiloni: I am guided by the procedure adopted for the European Corona Reconstruction Fund. To ensure more national responsibility, member states could be granted more leeway on debt reduction, insofar as fundamental joint principles are respected, not least those pertaining to debt sustainability. If member states commit to reforms and investments, they could be granted more time to pay down their debts. That would also be a way to ensure that sustainable finances and growth mutually reinforce each other.

DER SPIEGEL: The IMF has proposed the establishment of another crisis fund modeled after the Corona Reconstruction program. What do you think of that idea?

Gentiloni: First, we should focus our efforts on maximizing our existing crisis instruments and adjusting them to fit the new situation, like the Reconstruction Fund, for example. And we still have some leeway. But if the economic downturn becomes worse and begins affecting the labor market, we will have to reconsider. In such a situation, it could become necessary to consider further economic stimulus measures.

DER SPIEGEL: Europe has already piled up a fair amount of debt. How do you intend to ensure that future generations aren’t unduly burdened?

Gentiloni: Taken together, the eurozone is currently carrying a debt load equivalent to around 100 percent of economic output. That is a lot, but not an overwhelming amount when compared to other industrialized countries like Japan or the U.S. The problem in the eurozone is more that debt loads are so different between member states.

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