EU, Fee’s heavy hand on extreme deficit. Italy and France within the crosshairs –

The European Fee has ready a report underneath the extreme deficit process for 12 Member States to evaluate their compliance with the deficit criterion of the Treaty: Belgium, Czech Republic, Estonia, Spain, France, Italy, Hungary, Malta, Poland , Slovenia, Slovakia and Finland. On this evaluation, the Fee takes into consideration the related components introduced by Member States in case their public debt-to-GDP ratio is beneath 60% of GDP or their deficit is assessed as “shut” to the three% reference worth and “momentary”. In mild of the evaluation within the report, the opening of a deficit-based extreme deficit process is justified for seven Member States: Belgium, France, Italy, Hungary, Malta, Poland and Slovakia. That is what emerges from the European Semester spring bundle introduced at the moment by the European Fee.

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The report is barely step one in direction of opening extreme deficit procedures. In mild of this evaluation and after considering the opinion of the Financial and Monetary Committee, the Fee intends to suggest to the Council to open deficit-based extreme deficit procedures for these Member States in July 2024. As a part of the European Semester bundle autumn, to make sure consistency with the adjustment path established within the medium-term plans, the Fee will suggest to the Council suggestions to place an finish to the extreme deficit scenario.

Specifically, the EU Fee has assessed that Italy is now in a scenario of ‘imbalance’, bettering its judgment from the “extreme macroeconomic imbalance” of final yr. In Italy “vulnerabilities stay linked to excessive public debt and weak productiveness progress in a context of fragility of the labor market and a few residual weaknesses within the monetary sector, which have cross-border relevance”.