On Tuesday 22 October, the European Commission asked five euro area countries - Belgium, France, Spain, Italy and Portugal - for additional information on their draft budgetary plan 2020, which they sent in mid-October. Finland had also received a letter a few days earlier.
As in previous years, we have sent "a number of letters to Member States asking for additional information to facilitate the preparation of the Commission’s assessment", said a spokesperson for the European institution, for whom these letters are part of the "normal dialogue" between the Commission and the countries concerned. None of the six letters mentioned a possible rejection of the draft budgetary plan by the European Commission.
Concerning Italy, the competent Commissioners, Pierre Moscovici and Valdis Dombrovskis, point to a risk of "significant deviation" of the Italian budgetary trajectory from that agreed for 2020.
In particular, the structural deficit (excluding the impact of the economic cycle) is expected to increase by 0.1% of GDP, while an improvement of 0.6% is required for any country whose government deficit does not exceed 3% of GDP. Public spending would increase by 1.9% of GDP instead of a recommended economy of 0.1%. And the path of reducing Italy's public debt - the second highest after Greece in relation to the national GDP - is not in line with the Stability and Growth Pact.
But, according to Mr Moscovici, the current situation has nothing to do with tensions over Italian public finances observed a year ago, when Italy was led by a Eurosceptic government.
The letter received by the French authorities from the two Commissioners also mentions a "risk of significant deviation from the budgetary effort required in 2020". What is being challenged: - the zero structural effort, instead of a required structural improvement of 0.6% of GDP; - the growth rate of public expenditure of 2.6%, above the maximum recommended increase of 1.2%, and; - the failure to comply with the pace of public debt reduction.
"We will continue to meet our European commitments to restore public finances and reduce debt. In 2020, the public deficit will be 2.2% of GDP, the lowest level in nearly 20 years", reacted French Finance Minister Bruno Le Maire.
The draft budgetary plans of the other thirteen euro area countries are therefore considered to comply with European budgetary rules.
The Commission will present its autumn economic forecasts on Thursday 7 November.
See the draft budgetary plans 2020 of the euro area countries and the letters sent to six of them: http://bit.ly/33UEvGh (Original version in French by Mathieu Bion)