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Budgets of 8 EZ countries “at risk of non compliance”, but Commission gives them a 0.5% space

The European Commission is warning eight Eurozone member countries including Italy and Portugal that their national budgets plans for 2017 are “at risk of non compliance” with EU’s budget rules. Besides Italy and Portugal, these countries are Spain, Belgium, Finland, Slovenia, Cyprus and Lithuania.

Another five Eurozone members are “broadly compliant” with EU rules, These are Ireland, France, Austria, Latvia, Malta.

Only the remaining five countries are fully compliant: Germany, Estonia, Netherlands, Slovakia and Luxembourg.

Greece is not affected by the Commission’s budget review because it is under a separately governed bailout program.

However, instead of insisting on implementation of Maastricht rules that prescribe that eurozone countries must keep their budget deficits at or below 3% of annual GDP, the EC decided to give the countries at risk a little space of o.5%.

Ec president Jean-Claude Juncker and European Commissioner for Economic and Financial Affairs Pierre Moscovici seem to agree on that.

Commission President Jean-Claude Juncker said “those that can afford it need to invest more, while those which have less fiscal space should pursue reforms and growth-friendly fiscal consolidation.”

Pierre Moscovici on Twitter ‏@pierremoscovici
We call for fiscal support up to 0.5% for the €zone: countries w/ fiscal space should invest, others should respect their fiscal targets.

EU Commissioner Moscovici tweeted also this:

@EU_Commission concludes that action by #Spain & #Portugal is sufficient to avoid a suspension of EU funding.

Tensions have been particularly high between Italy and the Commission, which supervises the budget plans of euro countries and can order corrections or take action against states that fail to comply, .

Italy’s already shaky economy has been rocked by the arrival of tens of thousands of refugees and a series of devastating earthquakes. Prime Minister Matteo Renzi, whose government’s future could be decided in a referendum in a few weeks, has been requesting budget relief.

The EU’s top economy official, Pierre Moscovici, acknowledged that Rome is dealing with unusual circumstances.

“We will take that into account,” Moscovici told reporters. On refugees, he said that Italy has been bearing a “responsibility that is not just national but collective,” for the rest of the EU.


PS I’m sure that Dijsselbloem will have no objection to EC proposal. That’s the famous European solidarity among equals. Or Juncker and Moscovici just heard Obama saying in Greece “Austerity alone cannot deliver prosperity.” THe US President added also “Debt relief is needed.”

Now I have to rush and check older posts about the surreal surpluses the European Lenders have imposed on Greece.

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