Brussels, 13/05/2015 (Agence Europe) - On Wednesday 13 May, the European Commission recommended to the Council that it close the excessive deficit procedure for Poland and Malta, whilst a similar procedure may be opened for Finland. The United Kingdom, which has failed to take effective action, will have to stay in for another two years, until the financial year 2016-2017, a new deadline proposed by the Commission to get things back under control. For France, the verdict is expected on 10 June, a deadline already imposed on Paris to report back on the measures taken.
The Commission finds that for Finland, the deficit in excess of 3% of GDP can no longer be explained away by exceptional factors as was the case last year and this should be taken into account, the Commissioner for Economic and Financial Affairs, Pierre Moscovici, explained. Debt is also above the required threshold and should reach 67.8% by 2019. Deficit will stand at 3.4% this year, according to the Finnish stability programme. It will take the Commission about two weeks to decide whether or not to open an excessive deficit procedure against Finland. The Commission will also wait for the Finnish government to be in place before starting detailed talks with Helsinki.
The Commission recommends that the Council decide that the United Kingdom has not taken effective action to comply with the recommendation made to it in 2019 to correct its deficit by the financial year 2014-2015. The Commission explains that the fiscal effort delivered was below the annual average effort of 1.75% and the deficit last year stood at 5.2%. The Commission therefore recommends giving the UK an extra two years to comply with these criteria. London will not be sanctioned, as “the impact of the programme differs depending on whether the states are members of the euro area or not”, said Pierre Moscovici, who also noted that the British economy is doing well.
Malta reduced its deficit to 2.1% of GDP in 2014 and it is expected to remain below 3% for the financial year 2015-2016. The debt criterion, over which the country was also under a procedure, was complied with in 2014, allowing the country to leave the excessive deficit procedure, the Commission recommends.
For Poland, the headline deficit figure was 3.2% in 2014, but taking into account the net costs from 1999 (from a systemic pension reform which was reversed in 2013), the deficit was below 3% last year and is expected to reach 2.7% in 2015. The Commission therefore takes the view that Poland is complying with the deficit criterion of the Pact.
Italy, for its part, has managed to escape an excessive deficit procedure. The Vice-President of the Commission in charge of the Euro, Valdis Dombrovskis, recognised that Rome was benefiting from the communication on flexibility. However, he noted that it was important to implement the intensive reforms agenda, with more work required on the public administration reform, the employment market and taxation in particular. Pierre Moscovici said that there was no new report, because there had not been any new changes. As regards the decision of the Constitutional Court to cancel a pension reform from 2011, which will oblige the Italian government to compensate six million pensioners, Pierre Moscovici said that the Italian Minister had given him his word that measures would be taken in the next few days.
No excessive macro-economic imbalance procedures were opened, but Bulgaria, Croatia, France, Italy and Portugal, which do have such excessive imbalances, need to take decisive measures and come under specific monitoring. Germany, which continues to have a very high surplus, has once again been urged to use its budgetary margin to invest in infrastructure, education and research and to stimulate domestic demand. (Elodie Lamer)