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EU rebukes France, Italy and others over excessive debt

June 19, 2024

The EU has started disciplinary proceedings against seven member states, including France and Italy, over their accumulation of debt. Brussels had suspended debt regulations to help countries cope with COVID-19.

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European Union flags at the headquarters of the European Commission
The assessments of the 27 EU states' budgets and economies will be published by the European Commission on WednesdayImage: James Arthur Gekiere/dpa/Belga/picture alliance

The European Union on Wednesday took seven member states to task over excessive spending.

The assessments of the 27 EU states' budgets and economies will be published by the European Commission on Wednesday, with France, Italy and Belgium among the member states  to be reprimanded over their accumulated excessive new debt.

The Commission said it was satisfied that "the opening of a deficit-based excessive deficit procedure is warranted" in the case of seven countries. The group also included Hungary, Malta, Poland and Slovakia.

The EU suspended debt and deficit regulations to help countries cope with the economic fallout of the COVID-19 pandemic and Russia's invasion of Ukraine.

The rules are now back in place and now any EU country going over debt and deficit limits run the risk of legal action.

The EU's golden rules on debt

According to the reformed rules, an EU member state's debt may not exceed 60% of gross domestic product (GDP).

Highly indebted EU countries with debt levels over 90% of GDP have to reduce their debt ratio by one percentage point annually, countries

Additionally, the general government deficit — the shortfall between government revenue and spending — must be kept below 3%.

According to the commission's economic forecast, France is at -5.5%, Italy is at -4.4% and Belgium is at -4.4% and will breach this deficit limit in 2024.

Austria, Finland, Estonia, Hungary, Malta, Poland, Romania, and Slovakia also have deficits that are too high according to the rules. Spain is at exactly -3.0%.

kb/rc (AFP,dpa)