In Luxembourg on Friday 16 June, European finance ministers decided to end the excessive deficit procedures against Portugal and Croatia, thereby confirming that their government deficits had reached a level sustainably below 3% of national GDP.
For Portugal, the procedure dates back to 2009. From 4.4% of national GDP in 2015, the Portuguese deficit in nominal terms has been trimmed to 2.0% of GDP. According to the Commission’s spring economic forecasts, it is expected to stabilise at 1.8% of GDP in 2017 and 1.9% in 2018, although the support measures to the bank Caixa Geral de Depósitos may have a negative effect (see EUROPE 11743). Having stood at 130.4% of national GDP in 2016, the Portuguese government debt is expected to fall to 128.5% of GDP this year.
European Commissioner for the Euro Valdis Dombrovskis said that the decisions of the Ecofin Council regarding Portugal and Croatia reflect the overall improvement of national government finances in the European Union. Only four member states – Spain, France, Greece and the United Kingdom – are still under formal infringement procedures.
The Commission has already said that Greece, which is in a situation of budgetary surplus, was to benefit from a decision to abrogate the procedure in place against it, once the second monitoring mission of its third bailout plan is finalised (see other article). France needs to reduce its excessive deficit, which the Commission puts at just about 3% of national GDP, by the end of 2017 and Spain, which has seen a strong growth dynamic, is expected to get there this next year.
The Ecofin Council also approved the proposed country-by-country socio-economic recommendations presented by the Commission on 22 May in the framework of the European Semester budgetary process (see EUROPE 11793). These recommendations must now be approved by the meeting of the European Council of 22 and 23 June, before the Ecofin Council formally adopts them on 11 July. (Original version in French by Mathieu Bion and Lucas Tripoteau)