Europe Under Pressure to Confront Borrowing Dilemma

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The EU’s longstanding rule limiting budget deficits to 3% of gross domestic product and public debt to 60% of GDP is supposed to kick in again in January. Finance ministers from the bloc’s 27 members are debating the details, but the bigger picture is clear: Borrowing can’t be allowed to run amok anymore. One case in point has been Europe’s largest economy, Germany, which is under huge pressure domestically to rein in spending, following a judgment from its top court. Germany’s political leaders are in crisis mode as they try to recalibrate their budget for this year and rethink their strategy for managing public finances. At the same time, Chancellor Olaf Scholz promised his government will forge ahead with investments needed to modernize the economy and maintain competitiveness.