Berlin sees no need for further EU debt to ease energy crisis

BERLIN (Reuters) -Germany does not see the need for further European Union debt to tackle the bloc’s energy crisis, a government spokesperson said, after a media report said Berlin would change its position and support a joint issuance of EU debt through loans.

Financing the energy crisis and a shift towards green transition could be financed via the EU “Next Generation” fund which was created to support the bloc’s recovery during the coronavirus pandemic, the spokesperson said.

Only a fifth of approved available funds has been paid out, and the remainder could be used to tackle crises and finance the energy transition.

“To this end, an agreement must now be reached quickly with the European Parliament in order to be able to use these funds promptly,” the spokesperson added.

A government source on Monday told Reuters that Berlin had no plans to back a joint EU debt issuance. Germany’s Economic Council criticised the EU plan, calling it irresponsible in light of current inflation levels.

Citing sources, Bloomberg on Monday said Germany will change its position and support a joint issuance of EU debt through loans, pushing German government bonds yields higher.

“Currently we are seeing a worrying flight of capital from the euro area, which will gain further momentum through more and more debt and the resulting weakening of future government budgets,” the council’s secretary general, Wolfgang Steiger, said on Tuesday.

German chancellor Olaf Scholz had suggested at an informal EU summit last Friday using unused funds from the European recovery fund created during the coronavirus pandemic to fight the energy crisis.

($1 = 1.0305 euros)

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