European Union. Budget deficits: Brussels singles out seven countries, including France

As expected, the European Commission on Wednesday opened the way for excessive deficit procedures against seven EU countries, including France, where spending pledges are mounting two weeks before snap parliamentary elections. In addition to France, the procedures are “justified” for Italy, Belgium, Hungary, Poland, Slovakia and Malta, the Commission said in a press release.

These countries, which last year exceeded the public finance deficit threshold set at 3% of gross domestic product (GDP), will have to take corrective measures under the penalty of financial sanctions in the future to respect the European Union’s budgetary rules.

During Covid the rules were suspended

The European executive will formally propose to member states the initiation of procedures at the future meeting of finance ministers on July 16. These rules were suspended after 2020 due to the economic crisis associated with Covid and then the war in Ukraine. This year they were reformed and reactivated.

“This does not mean a return to normal, because we are not living in normal times, and certainly not a return to austerity, because that would be a terrible mistake,” said European Economy Commissioner Paolo Gentiloni, calling for “fiscal prudence”. ” in the face of geopolitical risks.

Financial sanctions were never applied

In principle, the Stability Pact provides for financial penalties of 0.1% of GDP per year for countries that do not implement the imposed corrections, or almost €2.5 billion in the case of France. In reality, these politically explosive penalties were never enforced. France, whose last budget surplus dates back to 1974, has been in an excessive deficit procedure for most of the time since the creation of the euro at the turn of the 20th century, but emerged from it in 2017.

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