MNI: 5-10 EU States Seen Facing Excessive Deficit Procedures

Between five and 10 European Union states are likely to face excessive deficit procedures based on 2023 deficit and debt data validated by Eurostat on Monday, EU sources told MNI.

The European Commission told MNI it would not speculate on specific states at this stage but noted that governments had been told on numerous occasions of its intention to open EDPs in the spring on the basis of the Eurostat data.

Last year, a total of 11countries recorded fiscal deficits higher than the EDP threshold of 3% of GDP, with France’s deficit totalling 5.5% of GDP and Italy’s 7.4%, according to Eurostat. An EDP imposes a fiscal adjustment, which can be enforced by fines and other sanctions.

JUNE ANNOUNCEMENT

The Commission has still to make a judgement on whether any deficit over 3% is likely to persist and on other mitigating circumstances, such as defence spending, an official told MNI. Another important factor will be whether states are forecast to dip below 3% in 2024. (See MNI: At Least 4 EU States For 7-Year Debt Plans-Officials)

EDPs will be based on the EU’s new fiscal rules if these are already agreed by June 19, which seems highly likely, given that the European Parliament will give its seal of approval in a plenary vote Tuesday this week.

The Commission will announce whether it will open EDPs in country reports included in its June 19 spring package, with subsequent steps made public later in the year.