Austria’s Blumel convinced EU funds to continue despite German court

LONDON – Austria’s chief financial officer says there is no need to worry about the EU’s recovery funds, and investors are becoming increasingly cautious about the delay in much – needed cash following the pandemic.

The EU agreed in July to leverage financial markets seeking 750 billion euros ($ 898 billion) to spread across the 27 countries and boost their economies to the coronavirus shock. However, in order to receive these funds, countries had to set out how they would use them – a process that has not yet been completed.

In addition, the German constitutional court threw a crumb at the trial. Last month, it raised doubts and effectively halted the necessary legislative steps in Germany before the funds could be released.

“Of course, we have followed the developments of the court ruling in Germany very well. They determine to a certain extent what many critics say is the danger of introducing temporary measures permanently,” said Gernot BlümeI, the finance minister of Austria, told CNBC on Friday.

The German court has acted after a group called Citizens’ Will Alliance complained that the EU treaties do not allow the group to accept joint debt. German judges have ruled that the federal government must ensure that loans at EU level ‘do not become a permanent solution’ – an opinion shared by Austria.

“I can understand what the German court has said and in some parts I agree,” he said, adding that Austria “is a little more skeptical when it comes to a permanent mutual accumulation of debt within the European Union”. ‘compared to France and Germany. .

“This is not what the Union is designed for. And we have now taken crisis management measures. But according to (its definition) a crisis is a temporary situation, so the measures we have taken to combat this crisis also have a temporary motive, ‘Blüme told CNBC’s’ Squawk Box Europe’ on Friday.

Another element is needed before the funds can be released: all EU member states must complete the ratification process in their national parliaments. Austria is one of the ten EU countries that have yet to do so and without it, the EU cannot exploit the debt markets.

“I am convinced that there will be no delay in issuing European bonds as well, as this is an important measure to revitalize the European economy,” said Austria’s CFO when asked why he country has not yet taken this step.

“We have agreed on the measures, Austria is paying a large share of 12 billion euros in this pot and we are doing this because we think it is the right way to increase growth within the European market, because all European citizens will benefit from it. benefit, “he added.

Austria, like other EU countries, has struggled to rapidly expand Covid-19 vaccines to its citizens.

But Chancellor Sebastian Kurz confirmed last weekend that negotiations to buy Russia’s Sputnik V vaccine have ended, although the shot has not yet been approved by the European Medicines Agency.

BlümeI said Austria followed the rules and “tried to get more doses for vaccination, only to recover the economy faster and give the people back their freedom.”

“I can see nothing wrong,” he said.

A few eastern EU countries, such as Hungary, have decided to go beyond the transactions negotiated by the European Commission to buy more vaccines themselves, even though they have not received medical permission throughout the block.

In an interview with CNBC, BlümeI said he was optimistic that Austria would vaccinate all of its adult population seeking a vaccine in the next two to three months.