EU Commission Intensifies Surveillance on Seven Member States Over High Budget Deficits
The EU Commission has announced its intention to place seven member states, including France, Italy, Belgium, Poland, Hungary, Slovakia, and Malta, under intensified surveillance due to their high budget deficits. This move comes after the EU debt rules were reinstated following their suspension during the COVID-19 pandemic. The rules stipulate that member states should maintain a maximum state debt of 60 percent and an annual deficit of three percent of GDP. France and Italy are currently of particular concern to the Commission, with France having a budget deficit of 5.5 percent and Italy with 7.4 percent last year. Financial markets are wary of France, as a potential change in government after the upcoming parliamentary elections could further increase the national debt. Twelve countries were examined by the Commission, with five countries, including Spain, Czech Republic, Slovenia, Estonia, and Finland, escaping the deficit procedure due to exceptional circumstances or temporary violations. The EU debt rules aim to ensure responsible fiscal policies in Eurozone countries, with countries under a deficit procedure potentially facing additional savings efforts and reforms, or even sanctions. The Commission will provide specific guidelines on debt and deficit reduction plans in November, following the implementation of the reformed Stability and Growth Pact in April. Member states are required to submit national debt reduction plans for the next four years by September for Commission approval. This transition year will see the Commission issuing recommendations on sustainable debt and deficit paths in November. The EU is stepping up its efforts to ensure fiscal responsibility among member states, with the goal of maintaining stability and sustainability in the Eurozone economy.
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