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04/12/2016

EU gives France to 2017 to cut deficit, Italy, Belgium in clear

Euro & Finance

EU gives France to 2017 to cut deficit, Italy, Belgium in clear

France will abide by its budget commitments, but will do so at its own pace, President Francois Hollande said on Tuesday, in advance of today's decision by the European Commission to grant Paris a two-year reprieve.

[Sally Bechsin/Flickr]

The European Commission granted France until 2017 to bring its budget deficit below the EU limit of 3 percent of GDP after Paris missed an already extended 2015 deadline.

At a news conference, the Commission also said it would not start disciplinary steps against Italy or Belgium over their rising government debt levels.

The European Union executive arm, which is the guardian of EU laws and budget rules, has the right to check the budget drafts of eurozone countries before they are approved by national parliaments to make sure they comply with EU laws.

The full assessment of the 2015 budget drafts of France, Italy and Belgium was postponed by three months last November to await final 2014 data and to give the three countries time to pass structural reforms that would justify breaking EU rules.

>>Read: French deficit takes centre stage in EU’s winter forecast

Since 2001, France had a deficit below 3 percent only in 2006 and 2007 and has repeatedly missed consolidation deadlines.

Italy’s public debt has been rising every year since 2008 and is to peak at 133 percent of GDP this year. EU rules say governments must reduce their debt every year by one twentieth of the difference between 60 percent and the current level.