EU to launch budget discipline process for 7 member states

The European Commission has published its "European Spring Semester Package," which includes recommendations regarding the economic situations of member states.

The study notes that the Commission has prepared reports specifically for Belgium, Czechia, Estonia, Spain, France, Italy, Hungary, Malta, Poland, Slovenia, Slovakia, and Finland to assess their compliance with EU budget deficit and public debt criteria.

Recalling that under EU rules, member states' budget deficits should not exceed 3 percent of their Gross Domestic Product (GDP) and public debt should not exceed 60 percent of GDP, the study states: "In light of the assessments in the report, an excessive deficit procedure needs to be initiated for Belgium, France, Italy, Hungary, Malta, Poland, and Slovakia."

PROPOSAL TO BE SUBMITTED

The study points out that the prepared reports are the first step toward initiating "excessive deficit" procedures, noting that after examining the multi-year spending plans to be submitted by member states in the coming months, the Commission will present a proposal to launch excessive deficit procedures for the 7 countries.

Union rules limit the public deficits and debts of member states. When these limits are exceeded, the measures to be implemented must be reported to the European Commission, and effective action must be taken. However, a significant portion of EU countries do not comply with fiscal rules.

The disciplinary procedure aims to force countries with excessive deficits to tighten their fiscal policies.

Countries that do not comply with fiscal rules can face financial penalties at the end of the disciplinary process.

EU member states decided to suspend these rules in 2020 due to the COVID-19 pandemic, leading to a rapid increase in budget deficits and public spending.

ENERGY AND INFLATION CRISIS HAD OCCURRED

This practice continued with the Russia-Ukraine War and the subsequent energy and inflation crisis.

Among EU member states, the countries with the highest public debt-to-GDP ratios in 2023 were Greece at 161.9 percent, Italy at 137.3 percent, France at 110.6 percent, Spain at 107.7 percent, and Belgium at 105.2 percent.

The EU countries with the highest budget deficits were Italy at 7.4 percent, Hungary at 6.7 percent, Romania at 6.6 percent, France at 5.5 percent, Poland at 5.1 percent, Malta and Slovakia at 4.9 percent, and Belgium at 4.4 percent.