House of Cards? – Belgium and France at Risk Over Public Finance

Written by | Monday, June 17th, 2019

The European Commission has rebuked France and Belgium because of their public debts. The warning followed the declaration of disciplinary procedures against Italy. However, in contrast to Italy, the Commission agreed that disciplinary proceedings are not necessary in the case of these two countries.

France ran into debt of 98.4% of its output last year, which is above the EU’s recommended rate of 60% of gross domestic product (GDP). The European Commission concluded that France, the second largest economy in the Eurozone, experiences temporary deficits only, executing structural reforms to comply with EU requirements. Although disciplinary procedures were not imposed, the French government has been urged to add fiscal measures to decrease the debt.

At the same time, Belgium has the EU’s fifth highest public debt at 102% of GDP, which made the Commission criticise the Belgian government for not reducing the overspending. However, it could not launch disciplinary proceedings because there was no sufficient legal basis. The Commission commented that structural reforms on pensions and taxes that have a negative impact on the economy were “substantial”, which makes the temporary shortfall understandable.

The Commission also highlighted the efforts of Spain to reduce its deficit and discussed the closure of existing disciplinary measures that were imposed against Spain in 2009. Overall, the EU economy is expected to grow in the next two years. “Above all, we must avoid a lapse into protectionism, which would only exacerbate the existing social and economic tensions in our societies,” said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

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