Europe scrambles to finalise new fiscal rules after lawmaker vote

According to Sander Tordoir of the Centre for European Reform, the hawkish German government is unlikely to relinquish the numerical targets so painfully hammered out in December – but might be willing to concede on some subdsidiary issues. Tordoir, a senior economist at the think tank, is optimistic a deal will be found, as there’s no unbridgeable philosophical gulf between the parliament and council.

If not, he warns of serious consequences – including the return of old rules that are both “absolutely terrible,” and no longer credible given the extra debts racked up during Covid-19.

“If the deal collapses, you’re in an absolute limbo,” Tordoir said, adding the absence of legal clarity may also start to make bond markets twitchy. “I don’t think that’s really a feasible outcome."