This week, the European Commission assessed the multi-year spending plans of the 21 member states that submitted them, giving them twenty points and one failing grade.
The passing countries: Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.
However, the committee rejected the multi-year plan submitted by the Netherlands. The Hague has been asked to draw up a revised plan, in line with previous estimates.
Hungary’s spending plan is still under examination, while Austria, Belgium, Bulgaria, Germany and Lithuania have not yet submitted their plans due to the upcoming general elections and the formation of new governments.
How are the eurozone countries doing?
The committee also published its regular review of EU member states’ 2025 budget plans, including submissions from 17 of the 20 eurozone members.
EU countries must submit their draft budgets to Brussels by October 15 every year, but this time the commission has allowed more flexibility due to new European rules on budget discipline introduced earlier this year.
The annual draft budgets must be submitted by the twenty members of the eurozone, while all 27 capitals of the European Union must submit their multiannual spending plans.
The aim is to make European economies more robust and public finances more sustainable.
While some countries have passed the fiscal health check with flying colors, others still have some work to do – and the Netherlands received another rejection for its 2025 budget.
The commission found that eight EU member states, Croatia, Cyprus, France, Greece, Italy, Latvia, Slovakia and Slovenia, were “on the same page”.
The following six EU Member States were “not fully aligned”: Estonia, Germany, Finland, Luxembourg, Malta and Portugal.
Lithuania is expected to ‘run the risk of not being in line’, while the Netherlands is ‘not at risk of not being in line’.
Ireland has not yet received a conclusive overall assessment, but the commission concluded that the country’s net expenditure growth is “expected to be above the ceiling”.
Austria, Belgium and Spain submitted no comments.
The European Union’s wealthier members, including Germany and the Netherlands, have traditionally been staunch defenders of the bloc’s strict spending limits, compared to its less affluent southern members.
However, the slow recovery from the economic fallout from the Covid-19 pandemic and Russia’s war against Ukraine has left typically frugal countries struggling to keep spending down.
Berlin’s cumulative spending is expected to exceed permitted limits, the commission said.
Germany’s three-party governing coalition recently collapsed over disagreements over how to tackle the country’s economic problems.
The 2025 budget is now expected to be adopted by the next German government after elections scheduled for February 23.
France is also facing internal money issues: its tighter 2025 draft budget is at the center of a political impasse that threatens to topple the government in Paris.
With a government deficit expected to reach 6.2% of gross domestic product this year, France is almost the worst performer among the 27 Member States, surpassed only by Romania, and is still far from the 3% deficit ceiling set by EU rules are allowed.
French Prime Minister Michel Barnier is struggling to get his economic plan past opposition from the political extremes.
It has drawn criticism from French far-right figurehead Marine Le Pen, who has threatened to support a vote of no confidence if the plan is pushed through.
To limit the government deficit and debt, EU fiscal rules stipulate that Member States must not produce a deficit higher than 3% of their gross domestic product (GDP) and must not exceed the 60% of GDP public debt threshold. exceed.
Countries with excessive deficits are closely watched
EU members who break these rules enter an excessive deficit procedure and are closely monitored by the commission as they bring their spending into line with EU law.
A total of eight countries are currently under the EU’s excessive deficit procedure, namely France, Belgium, Hungary, Italy, Malta, Poland, Romania and Slovakia.
Romania has been involved in the procedure since 2020.
The commission warned that Austria, whose deficit is expected to be 3.6% this year, could join them.
These countries must take corrective measures to comply with EU fiscal rules in the future or risk fines.
Until now, the commission has never dared to resort to financial sanctions, which are considered politically explosive. But that can change.
Budget rules facelift: what’s behind it?
The new rules are an adjustment to the EU’s Stability and Growth Pact, which guided member states through the eurozone crisis and subsequent years with varying degrees of success.
The pact was suspended between 2020 and 2023 to prevent a collapse of the European economy following the Covid-19 pandemic and the outbreak of war in Ukraine.
It was reactivated in early 2024 but given a facelift to make it more flexible and pragmatic.
Budgetary paths are now tailor-made for each Member State and room for maneuver has been introduced to allow for investments.
They are spread over a period of four years, which can be extended to seven years to make the adjustment less abrupt, in return for promises of reform.
Five countries – France, Finland, Romania, Spain and Italy – have applied for and received such an extension.
The multi-year plan must meet the EU’s requirements with regard to net expenditure, but also the government’s deficits and debts.
Financial penalties for non-compliance with the pact, which were previously unenforceable because they were too strict, have been reduced to make them easier to apply.
Once a country’s medium-term budget plan has been jointly adopted by all EU members, the expenditure path becomes binding for the period covered by the document.
Its implementation will be regularly assessed by the committee.
The content of this article is based on reporting by AFP, AGERPRES, ANSA, BTA, dpa, EFE, LUSA, HINA and STA as part of the European Newsroom (enr) project.
