Eight states at risk of breaching EU stability pact
Dombrovskis - Moscovici - Photo EC
(BRUSSELS) - High levels of debt mean eight EU Member States - including France and Italy - are at risk of non-compliance with the European Stability and Growth Pact, the Commission said on Wednesday.
Today, the EU executive presented its Opinions on euro area Member States' 2020 Draft Budgetary Plans, took steps under the Stability and Growth Pact and adopted the fourth Enhanced Surveillance Report for Greece.
EC vice-president Valdis Dombrovskis said: "With mounting risks weighing on Europe's economic growth prospects, it is reassuring to see euro area countries like Germany and the Netherlands using fiscal space to support investment. However, there is scope for them to do more. On the other hand, Member States with very high levels of debt – such as Belgium, France, Italy and Spain – should take advantage of the lower interest expenditure to reduce their debt. It should be their priority."
Economic Affairs Commissioner Pierre Moscovici added that "the Commission invites countries with high debt to pursue prudent fiscal policies, while encouraging those with fiscal space to invest further. This differentiated approach will strengthen the euro area."
The assessment finds that since July this year - for the first time since 2002 - no euro area Member State is under the Excessive Deficit Procedure. The two criteria for this are: the budget deficit must not exceed 3 % of gross domestic product (GDP); and public debt must not exceed 60 % of GDP.
The Commission's assessment also finds also that euro area debt-to-GDP ratio is expected to continue its declining path of recent years and to fall from about 86% in 2019 to about 85% in 2020. It says this is happening against the backdrop of a weakening European and world economy.
In the Opinions on the Draft Budgetary Plans of all euro area countries, the Commission found that no Draft Budgetary Plan for 2020 showed particularly serious non-compliance with the requirements of the Stability and Growth Pact.
Nine Member States' Plans were compliant with the Stability and Growth Pact in 2020; two Member States were broadly compliant and for eight Member States, the Plans posed a risk of non-compliance with the Stability and Growth Pact next year.
The Commission has also adopted the fourth report for Greece under the Enhanced Surveillance framework. The report concluded that Greece's budget plan for 2020 met the agreed primary surplus target of 3.5% of GDP in a growth-friendly manner, and that the government had overall taken the necessary actions to achieve its specific reform commitments for mid-2019, in the context of advancing a broader reform agenda.
Finally, the EU executive took a number of steps under the Stability and GrowthPact. For both Hungary and Romania, it proposed that the Council would adopt a decision on non-effective action and revised recommendations to Hungary and Romania to take measures in 2020 to correct their significant deviation from the adjustment path towards the medium-term budgetary objective.
Communication on the 2020 Draft Budgetary Plans of the euro area
Commission Opinions on the 2020 Draft Budgetary Plans
Significant Deviation procedures for Hungary and Romania