Thursday

22nd Oct 2020

Tough times push three more outside EU budget rules

  • EU leaders will meet on Thursday to discuss an overhaul of the EU's budgetary rules (Photo: Fotolia)

The EU's economic malaise has forced a further three states to breach the bloc's budgetary limitations, just days before EU leaders are to meet in Brussels to discuss ways to overhaul the tattered rulebook.

Speaking from Strasbourg on Tuesday (15 June), European economy commissioner Olli Rehn announced that Cyprus, Denmark and his home country, Finland, are to join the growing pack of excessive deficit countries, as defined by the EU's Stability and Growth Pact.

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"The entry into the excessive deficit procedure of these countries, which until recently had surpluses, shows the severity of the economic and financial crisis we have gone through," said Mr Rehn.

With even the formerly fiscally virtuous exceeding the EU's deficit and debt limits, three and 60 percent of GDP, respectively, the number of states still in compliance can now be counted on one hand.

Estonia, Luxembourg and Sweden are still considered to be budgetary angels by the commission, with Bulgaria technically still in compliance, but "likely to be put into the excessive deficit procedure once we can examine their data," said Mr Rehn.

Earlier this month, the EU executive body signaled that it plans to send a team of number crunchers to Sofia to scrutinise the country's budgetary data due to doubts over its veracity.

The commission recommends that member states set a deadline of 2011 for Finland to correct its budgetary position, 2012 for Cyprus and 2013 for Denmark - the timetable procedure being the main thrust of the excessive deficit procedure, which has never resulted in any member state getting a fine.

Progress by other states

The 12 EU states for whom timetables have already been set had their progress assessed, with Portugal and Spain uppermost in the minds of investors.

Both states have recently outlined additional measures in response to growing pressure from markets to decrease their budgetary deficits.

All capitals, including the southern two, were told actions to date were in accordance with the commission's previous recommendations, while further details on specific measures to reach deficit targets for 2011 were requested.

Barroso: EU budget rules are 'adaptable'

The EU commission has indicated it is prepared to give struggling countries some leeway to bring their debt back in line with EU rules, but continues to insist that member state cannot spend their way out of problems.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

EU budget talks suspended in fight for new funds

MEPs are requesting additional, new funding of €39bn for 15 EU programs. The German presidency argues that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change without a new leaders' meeting.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

MEPs warn of 'significant gaps' in budget talks

The budget committee chair said the European Parliament expects tangible improvements to the package in its talks with member states - while the German minister argued that the EU leaders' deal was difficult enough.

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