Brussels, 24/11/2015 (Agence Europe) - The additional costs for security measures which certain member states, such as France, will incur in 2016 to tackle the terrorist threat will be appreciated on a case-by-case and ex post basis as regards the European budgetary rules.
“Security comes first”, the President of the Eurogroup, Jeroen Dijsselbloem, said on Monday 23 November following an extraordinary meeting of the finance ministers of the eurozone given over to the draft budgets for 2016. Along the lines of the approach used to deal with public expenditure related to the influx of refugees, “the Commission will take it into consideration case-by-case but ex-post”, he added. He said that according to the figures he has been given, the planned security expenditure following the Paris attacks will not derail the budgetary trajectories of the countries in question. This was echoed by the European Commission. “The figures in our possession are unlikely to affect the budgetary trajectories of the countries concerned in worrying proportions”, observed the Commissioner for Economic and Financial Affairs, Pierre Moscovici. He believes that “there is no reason, at this stage, to anticipate any negative effect on recovery, which is solid”.
France has confirmed to the EU that it will be making €600 million in additional expenditure in 2016 to reinforce the police, gendarmerie, justice and customs systems following the recent terrorist attacks on Paris (see EUROPE 11434). “Everybody agrees that this expenditure is not up for discussion” and is not expected to jeopardise France's budgetary trajectory, its minister, Michel Sapin, stressed. He added that for 2015, the French government had pledged €1 billion in security expenditure “fully offset by corresponding savings” and that for 2016, a further €600 million had been earmarked to pay for army and defence expenditure. This means that only the €600 million announced after the Paris attacks will not be offset. Not calling for any particular treatment for his country with regard to the Stability and Growth Pact, the Minister repeated that France would bring its nominal deficit below the 3% of GDP mark in 2017.
On behalf of the S&D group at the European Parliament, Italy's Gianni Pittella, expressed his disagreement with the Eurogroup's approach. “Eurogroup's position is wrong because if a country wants to invest in security and in defence, it has to do it without calculating these expenditures in the stability Pact”, he told EUROPE in Strasbourg on Tuesday 24 November. On the same day, he also sent this message to Moscovici.
Budgets 2016. On Monday, the Eurogroup “overall” adopted the European Commission's analysis of the draft 2016 budgets submitted to it by the eurozone countries.
The draft French budget 2016 is one of seven national draft budgets (Belgium, Latvia, Malta, Finland, France, Ireland and Slovenia) which the Commission considers to be “overall compliant” with the Stability Pact. Dijsselbloem welcomed the fact that the seven countries have undertaken to adopt any measures necessary to comply with the European budgetary rules. It is also worth noting that the German, Estonian, Luxembourg, Dutch and Slovakian draft budgets were deemed compliant.
For four other countries (Austria, Italy, Lithuania and Spain), the draft 2016 budgets risk infringing the Pact. With a nominal deficit below 3% of GDP, Austria, Italy and Lithuania have also undertaken to adopt all measures necessary to comply with the European budgetary rules. As Spain is under an excessive deficit procedure, the Spanish government to be voted into power in late December must ensure that the 2016 budget complies with the Pact (see EUROPE 11408).
Italy, which has a nominal deficit below 3% of GDP, intends to make use of all of the flexibility clauses authorised by the Stability Pact, such as the clauses on structural reforms (Rome wishes to deviate from the required trajectory by 0.1% of GDP), investment and refugees. “We will take time until next spring to carry out our analysis”, said Moscovici. The Eurogroup also notes that the structural effort (not counting conjunctural effect) forecast by Italy is below the required effort (-0.5% of GDP instead of +0.1%).
The ministers also regretted the fact that Portugal, which has no stable government, has still not submitted its 2016 draft budget.
Lastly, the ministers noted that five member states (Germany, Austria, Belgium, Finland and Italy) submitted information in their draft 2016 budgets on the costs associated with hosting and integrating refugees present on their territory (see EUROPE 11425). A decision on how this expenditure will be treated with regard to the Pact will also be taken on a case-by-case and ex post basis. (Original version in French by Mathieu Bion)