The European Commission gave France 2017 deadline to tame its budget deficit. The objective is to bring the French annual government budget deficit below the EU limit of 3 percent of gross domestic product (GDP) after the country had already missed an extended deadline this year. The threshold of 3 percent is part of the EU’s convergence criteria together with the rule concerning the gross government deficit to GDP that should not go beyond 60 percent.
The EU Commission also said it would not introduce disciplinary steps against Belgium or Italy, which are also facing rising government debt levels. The Commission, the EU’s executive branch, has the right to check the budget drafts of Eurozone Member States before they are endorsed by national parliaments to ascertain that they comply with EU legislation.
France, Italy, and Belgium were all given extra time until all 2014 data was available for review and the full assessment by the Commission. Originally, the review was due in November last year but Brussels decided to grant these three economies more time to introduce structural reforms that would justify breaching EU rules. Over the 14 year-period, it was only in 2006 and 2007 that France had its deficit below EU’s standard of 3 percent while in all the other years, Paris has repeatedly missed consolidation deadline.
In Italy, public debt has been on rise for five years to peak at 133 percent of GDP this year. In Belgium, the outstanding sovereign debt is currently at about 104 percent compared to France’s 92 percent. The most indebted Eurozone countries remain Greece and Portugal with 174 and 128 percent respectively. EU legislation requires governments to decrease their debt every year by one twentieth of the difference between 60 percent and the current level.