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21st Jul 2019

France can expect budget flexibility after Paris attacks

  • Moscovici (r): 'The security of citizens is the absolute priority, and the commission will show full understanding' (Photo: © European Union, 2015)

France can expect budgetary leeway from the EU Commission for new costs stemming from the Paris attacks and additional security measures.

“The security of citizens is the absolute priority, and the commission will show full understanding,” Pierre Moscovici, EU finance commissioner said on Tuesday (17 November) while presenting, along with Valdis Dombrovskis, vice-president for the euro, the opinion of the bloc’s executive on the budgetary plans of member states.

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Moscovici, a former finance minister of France, said the commission’s approach will be smart and humane.

France’s president Francois Hollande earlier announced

additional costs for security purposes, and prime minister Manuel Valls on Tuesday said France’s budget targets will be overshot.

Moscovici recalled that in France’s budgetary plans the additional costs are not yet included, and they will have to be taken into account in the spring.

“Sound public finances and security have always been complimentary goals for European governments,” Moscovici said.

“Safety of citizens of France is a priority,” his colleague, Valdis Dombrovskis, added.

France is required to correct its deficit by 2017, bringing it under 3 percent of GDP according to EU rules, but the commission warned before it is not going to hit that mark in time.

Refugee costs

“Austria, Italy, Belgium, Germany and Finland have already outlined the additional costs due to the unprecedented refugee crisis in their budgetary plans,” Dombovskis told press on Tuesday.

The EU rules include a provision “for unusual events outside government control."

“The commission is willing to use this provision,” the commissioner confirmed.

Officially so far, Italy and Belgium have requested flexibility with regards to the extra expenditure on refugees, an EU source told EUobserver.

Austria and Finland also provided data on the extra costs associated with handling the influx of people and the EU commission is expecting other countries on the migration route, for instance Slovenia, to also submit data.

The source said some of the member states affected by the refugee flow could not yet include the extra costs in the budgetary plans that needed to be submitted to the commission by 15 October.

“It's important not to judge now,” he said.

Commission experts will examine the data, finalised in April, and will assess how much of the extra migration expenditure impacted the total expenditure in the budget, and then, if these costs meet the criteria, subtracted from them the total sum.

Member states have to provide a detailed breakdown of the costs.

EU sources said only expenditure strictly related to the refugee flow can be subtracted, like shelter or food.

Border control costs, like fences, and expenditure with regards to the overall migration policy cannot be taken into account.

No new plans

According to the EU executive’s analysis, no member state is in serious non-compliance with the requirements of EU rules; no new budgetary plans were requested on Tuesday by the bloc’s executive under the rules introduced three years ago following Europe’s debt crisis.

Slovenia and Ireland, two other eurozone countries in breach of the deficit benchmarks, could bring their deficit under 3 percent, if they stick to their plans.

The commissioners highlighted that Italy is substantially deviating from earlier recommendations of structural deficit improvement for 0.1 percent next year. In fact, Italy is going to have 0.5 percent worsening of the structural balance.

At the same time, Italy has requested flexibility of 0.3 percent of GDP under the investment clause, 0.2 percent of GDP for the refugee crisis, and 0.1 on structural reforms. Italy is the only country that wants to tap-in to all the clauses.

Portugal failed to send in the budgetary plan due to the political crisis which ensued after the October elections.

Moscovici called it “regrettable,” and encouraged Lisbon to send it as soon as possible.

Cyprus and Greece are under bailout programmes, their budgetary planning is closely monitored by the creditors, and the EU commission.

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