On Tuesday, the European Commission predicted that France, Italy and Spain will break the European Union deficit and debt reduction goals this 2016 and the following year unless they take crucial and urgent action with their policies.
Another one likely to be in breach of EU budget rules is Portugal.
The EU budget laws oblige governments to maintain the headline budget gap below 3 percent of the GDP and cut the structural gap yearly until they achieve balance. This excludes the effects of the business cycle and one-offs.
Failure to do so results into a disciplinary procedure in which the EU finance ministers arrange deficit reduction goals and deadlines for them.
Three of the euro zone’s four greatest economies were forecast to oversee the targets set by the European Union finance ministers under the aforementioned disciplinary procedure for those that run undue budget deficits and have excessive public debt.
Forecasts also showed that Germany, the euro zone’s biggest economy, was in negative fiscal health.
In the second half of May, the Commission’s predictions along with medium-term consolidation plans passed by governments in the previous month will be the basis for a Commission decision on whether to improve the disciplinary procedure against those in breach of the laws.
The EU’S official forecasts serve as the foundation for budget discussions between EU officials in Brussels and the union’s governments. New and stricter fiscal rules were introduced in 2013 to prevent a repeat of the sovereign-debt crisis. They allow Brussels to examine budgets before they are submitted to national parliaments and to suggest amendments in their plans for expenses.
Get access to accurate market forecasts from FSM News. Receive regular updates by subscribing to our daily newsletter.