Brussels, 02/12/2009 (Agence Europe) - The ECOFIN Council on Wednesday 2 December 2009 continued working on the implementation of excess deficit proceedings against 14 member states (see EUROPE 10017). The decisions were taken by unanimous votes and call for extremely difficult decisions to be made in several member states, explained Swedish Finance Minister Anders Borg after the meeting, aware of the problems of squaring the circle facing countries as they try to mesh short-term public-funded recovery measures with improvements to the public purse in the long-term.
The ministers updated and extended the deadlines for four countries in the light of their economic circumstances (France, Spain, Ireland and the United Kingdom). Excess deficit proceedings were launched against all four six months ago but they have taken satisfactory measures in the meantime to correct their excess budget deficits (under Article 126.7 of the Treaty on the functioning of the EU, erstwhile Article 104). The Council says that Greece has not complied with ECOFIN's previous recommendation and in its decision, the Council notes that the Greek government has not taken effective measures over the past six months (Article 126.8 of the Treaty). Further time and new adjustment measures will not be drawn up, however, until February 2010. For 9 other countries (Germany, Austria, Belgium, Italy, the Netherlands, Portugal, Slovakia, Slovenia and the Czech Republic), the Council adopted decisions noting the existence of excess deficits and setting out an adjustment trajectory and timetable for the first time (Article 126.6 and 126.7 of the Treaty). All nine have until 2 June 2010 to come up with corrective measures.
For all the above-mentioned countries, the Council opted for the date recommended by the European Commission for the countries to return to below the 3% cut-off point stipulated in the Stability and Growth Pact, but the recommended belt-tightening has been eased for some member states, particularly France and Spain, which are now both required to reduce their deficits by 1.25 % (rather than 1.75 % as recommended by the Commission). This also applies to Germany, but to a lesser extent because only the lower figure recommended by the Commission has been endorsed (an annual average reduction of 1.5 % is now being recommended). For Austria and the Netherlands, the upper recommended figure has been endorsed (0.75 %). The average annual budget deficit correction to be made by Slovakia and the Czech Republic is the upper figure recommended by the Commission, namely at least 0.75 %. The Council did not change the Commission's recommendation for the other countries. Ireland will have to correct its budget deficit by an annual average of 2 %, the UK by 1.75 %, Belgium by 0.75 %, Italy by 0.5 % and Portugal by 1.25 %.
The deadlines for returning to budget deficits of below 3% of GDP have not changed: 2012 for Belgium and Italy; 2013 for Germany, Austria, Spain, France, the Netherlands, Portugal, the Czech Republic, Slovakia and Slovenia; 2014 for Ireland; and 2014-2015 for the United Kingdom. (A.B./transl.fl)