Monday

25th May 2020

EU fiscal rules won't be changed, says Juncker

  • The EU's stability and growth pact will not be changed

The EU's rules on debts and deficits will not be re-written, Jean-Claude Juncker told MEPs in his first speech as European Commission president.

“The rules will not be changed,” said Juncker, whose team was backed by the European Parliament in Strasbourg on Wednesday (22 October). “We have to have budgetary discipline, we have to have flexibility and we have to have structural reforms as well,” he added.

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Juncker's speech, during which he told deputies that his proposed €300 billion investment programme would have to be largely funded by private investment, came as the outgoing commission prepares its final set of assessments of national budgets drafted by the 18 eurozone countries.

The EU executive has until the end of the month to give its opinions to national capitals but has already been in touch with national treasuries.

The Financial Times reported on Wednesday that a handful of countries would receive warnings from Brussels to revise their budget plans, stating that Italy, France, along with Finland, Malta, Slovenia and Austria were in the firing line.

Commission spokesman Simon O'Connor confirmed that "technical consultations are underway with some member states," but said these "do not prejudge the conclusions of the commission" on the budget plans.

France and Italy are the two most high profile countries believed to be on the commission's radar.

The three-year budget programme tabled earlier this month by Francois Hollande's government revealed that France only intended to reach a 3 percent budget deficit by 2017, rather than in 2015.

Italy is not currently in breach of the rules but PM Matteo Renzi's plans to cut taxes on income and business are forecast to increase its deficit to 2.9 percent, close to the limit.

However, its debt burden stands at around 127 percent of GDP, more than twice the 60 percent threshold set out in the EU's stability and growth pact.

Both countries, the eurozone's second and third largest, have seen their economies fail to grow so far in 2014.

Italian MEP Roberto Gaultieri, chairman of the parliament's economic affairs committee, said that both countries' budgets were in line with EU rules.

But he said France's "ambitious plan of reforms" was "clearly a deviation from the path of reducing its structural deficit".

The eurozone's economic governance rules allow countries to deviate from the deficit targets only in the event of "exceptional" economic circumstances such as deflation or recession.

In a report adopted Wednesday MEPs accused governments of failing to implement the bloc's economic governance rules.

In a non-legislative report on the so-called 'European Semester', which co-ordinates economic reforms across the eurozone, the parliament found that only 10 percent of the commission's country-specific reform recommendations (CSRs) for 2013 had been implemented in full and that little or no progress had been made on 45 percent of cases.

"There is an inconsistency between European commitment and national implementation of the CSRs by member states," the report says.

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