European Commission takes action against seven EU countries for excessive debt

by dpa | 20.Jun 2024 | Europe in brief

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Belgium, France, Hungary, Italy, Malta, Poland and Slovakia have been warned about their excessive budget deficits and instructed by the European Commission to reduce their public spending in line with EU rules.

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EU flags fly in front of the headquarters of the European Central Bank (ECB) in Frankfurt, Germany. Photo: Frank Rumpenhorst/dpa
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Brussels (dpa) – On Wednesday, the European Commission started disciplinary proceedings against France, Italy and five other European Union member states for taking up excessive new debt, in breach of EU rules.

Belgium, Hungary, Malta, Poland and Slovakia have also been taken to task by the European Union’s executive arm for the budget deficits they have been running.

Wednesday’s Commission decision is the first step in a process called an excessive deficit procedure (EDP), instructing the seven EU countries to reduce their public spending in line with EU standards. 

The EU decided to suspend the debt and deficit regulations in the economic fallout of the Covid-19 pandemic and the full-scale Russian invasion of Ukraine. With the rules now back in place, after some reforms were negotiated, any EU country that breaches the debt and deficit limits risks legal punishment.

Under recently reintroduced EU budget rules, member states must keep their debt within 60 percent of gross domestic product (GDP) and limit their deficit to 3 percent of GDP.  According to the Commission’s economic forecast, France (5.5 percent deficit), Italy (-4.4 percent deficit) and the five other EU member states will breach this budget deficit limit in 2024.

In May, the Commission had already forecast that multiple EU countries were going to breach regulations on budget deficits and national debt levels in 2024.

Austria, Finland, Spain and Estonia were also flagged in the May forecast but received a reprieve on Wednesday after their comparative debt levels were deemed favourable and their deficit judged to be temporary. Romania was also highlighted but is already subject to disciplinary proceedings over high debt and deficit levels.

EU finance ministers will be asked to approve the Commission’s assessment in July. Then, under the supervision of the Commission, countries subject to an EDP must submit measures to reduce their debt and deficit for four years. (19 June)

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