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EU criticizes 8 countries for excessive spending

By Earle Gale in London | China Daily Global | Updated: 2024-06-21 04:20
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Disputes between the European Union and high-spending member nations about the size of their budget deficits are resuming, after the bloc resurrected financial regulations it suspended because of the novel coronavirus pandemic.

The reactivation of the 27-member bloc's financial rules means eight countries will now be subjected to the EU's Excessive Deficit Procedure.

Belgium, France, Hungary, Italy, Malta, Poland, and Slovakia will be put on the special measures that previously had only applied to Romania.

Romania has also been accused of failing to respond to previous warnings from Brussels about the size of its budget deficit.

The EU can levy fines against countries that break its financial rules, which it introduced to ensure the stability of the bloc's shared currency, the euro, and to ensure the EU is competitive globally.

EU Executive Vice-President Valdis Dombrovskis said in a statement: "Longstanding structural challenges are holding back the EU's competitiveness … We look forward to receiving national fiscal structural plans from member states that bring down debt and deficit and reflect today's recommendations."

Romania has the largest deficit among EU member nations, with it predicted to now be 7 percent of its GDP.

France had the second-largest in 2023, at 5.5 percent of GDP.

The EU's financial rules, which were introduced in the 1990s as the bloc developed its common currency, call for member countries to limit deficits to a maximum of 3 percent of GDP.

In 2020, the bloc ordered Romania to ensure its deficit was back under control by 2022, but the novel coronavirus pandemic intervened and Brussels suspended its rules as nations ramped up spending on healthcare.

Brussels said this week Romania must now reform its taxation system and shrink the salaries of government workers in a bid to reduce spending.

The EU also said several other members are running high deficits but will not yet be sanctioned. These included Estonia, which has ramped up spending on defense since the outbreak of the nearby Russia-Ukraine conflict.

The Czech Republic, Finland, Slovenia, and Spain were also warned they had breached budget rules, albeit temporarily.

The rules around the size of budget deficits that nations can carry have caused bitter rifts among EU member countries in the past, with financially prudent countries, including Germany and the Netherlands, criticizing apparently free-spending countries, including Greece and Italy, and complaining that their deficits were impacting the rest of the bloc.

The EU will next discuss the eight nations' alleged spending irregularities in December. In the meantime, the countries must submit roadmaps in September that detail how they plan to put their financial houses in order. The EU also plans to issue guidelines in the fall on how countries can reduce spending.­­­

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