EU needs to solve problems without joint debt, German minister says

By Maria Martinez

DURBAN, South Africa (Reuters) -The European Union should find solutions to its finances without using common borrowing, German Finance Minister Klingbeil told Reuters on Thursday.

Klingbeil said the EU had joint debt in the last few years, but that was in a crisis situation during the COVID pandemic, he said in an interview on the sidelines of a G20 meeting in Durban, South Africa.

"Overall, we need to resolve the finances of the EU differently than through a policy of joint debt," he said.

"Fortunately, we are not in such a crisis right now."

Current geopolitical challenges will be discussed at this week's meeting of G20 finance chiefs which takes place against the backdrop of Donald Trump's tariff threats.

U.S. Treasury Secretary Scott Bessent is not attending the summit, and many European finance ministers are also absent.

"I would have wished that more finance ministers were here, but I believe that those who are here will make good discussions," Klingbeil said. "There will be good partnerships, and that will certainly be an incentive for others to come next time."

The 30% tariff on European goods threatened by Trump would, if implemented, be a game-changer for Europe, wiping out whole chunks of transatlantic commerce and forcing a rethink of its export-led economic model.

"This has been dragging on for a very long time," Klingbeil told Reuters. "We really want to have a solution by August 1."

Last year the U.S. accounted for a fifth of all EU exports - its largest partner.

If a deal is not reached by August 1, Brussels is discussing countermeasures, including the so-called anti-coercion instrument, which allows the bloc to retaliate against countries that put pressure on EU members to change economic policies.

Klingbeil said now the talks are focusing on finding a joint solution with Washington.

"That's the message we are sending," the finance minister said. "But rest assured, if it doesn’t work out, then we are prepared, we will react united and decisively, and then there will be a European response."

(Reporting by Maria MartinezEditing by Madeline Chambers)