Brussels, 24/03/2009 (Agence Europe) - On Tuesday 24 March, the European Commission formally noted the existence of excessive deficits in France, Greece, Ireland and Spain (Article 104§5 and 6 of the Treaty). With a deficit ratio compared to GDP exceeding 3% in 2008 (EUROPE 9843), these four countries are therefore prescribed (variable) delays for returning below the reference threshold of the Stability and Growth Pact (SGP) (Article 104§7). For the United Kingdom, which has already been concerned by excessive deficit procedure, the Commission recommends that a new deadline be fixed. EU finance ministers will examine the Commission's recommendations at their informal meeting in Prague on 3 and 4 April before making the Ecofin Council's position official during a forthcoming session. Member states concerned have six months in which to set out the measures they plan to take to gradually reduce their deficits.
France. According to the latest estimates for France, the country's deficit was 3.4% of GDP in 2008 and 5.6% and 5.2% are forecast for 2009 and 2010. This excessive deficit is therefore neither close to the SGP reference value nor temporary and the ratio of this public debt is above 60% of GDP. The Commission therefore recommends that the Council acknowledge the existence of excessive deficit and calls for this deficit to be corrected by 2012 at the latest.
Greece. After having recorded 3.5% deficits of GDP in 2007 and 3.7% in 2008, the country is expected to exceed the SGP threshold in 2009 and 2010 (with over 4% the next year if nothing is done). Given the relatively limited adjustment required, the Commission recommends that Greece adopt the necessary measures to bring its deficit down below the 3% mark by 2010 at the latest. Spending restrictions are desirable in 2009, as well as in 2010, the Commission says, also recommending that vast structural reforms be implemented as a matter of urgency in order to remedy existing external imbalances.
Ireland. From 6.3% of GDP in 2008, Ireland's excessive deficit should reach 11% of GDP in 2009 and 13% in 2010 if policies continue unchanged. Given the current weakness of the Irish economy and the size of the deficit, excessive deficit correction over a period of several years seems warranted, the Commission states in a press release. It points out that additional measures to those set out in the updated stability programme could be necessary to bring this deficit below the 3% of GDP mark in 2013 at the latest. These measures should be defined in due course and concern not only spending but also receipts.
Spain. According to the Spanish government's figures, the country's deficit reached 3.4% of GDP in 2008. Commission figures show slippage to around 6% in 2009 and 2010. After having fallen to 36.2% in 2007, public debt is expected to again exceed 50% in 2010. Given the situation of the Spanish economy and other factors, excessive deficit correction in 2012 at the latest seems adequate, the Commission states in its analysis, before going on to recommend that improvement efforts should continue after that date to ensure a return to budgetary balance.
United Kingdom. Concerned by excessive deficit procedure since July 2008, whereby the country was to fall below the 3% mark during the budgetary year 2009/2010, the United Kingdom has since been through a more marked economic slowdown and taken recovery measures that have made this deadline untenable. Deficit is expected to reach 8.2% of GDP in 2009/2010 (Commission anticipates 9.5%). In this unfavourable context, the Commission calls on the Council to note the lack of measures that have given results and recommends that it fix a new date for correction, now expected for 2013/2014 at the latest. London should made additional annual efforts as of 2010/2011 and seek to gradually eliminate the rising rate of gross indebtedness. (A.B./transl.jl)