EU Council launches excessive deficit procedures against seven member states

The Council of the European Union officially initiated procedures on Friday to address excessive deficits in seven Member States, aiming to restore fiscal discipline across the bloc.

The Council adopted decisions identifying excessive deficits in Belgium, France, Italy, Hungary, Malta, Poland, and Slovakia. Additionally, it was determined that Romania, which has been under an excessive deficit procedure since 2020, has not implemented effective measures to correct its fiscal imbalance.

The excessive deficit procedure is designed to ensure that Member States maintain or restore budgetary discipline, avoiding unsustainable public finances. The objective is to manage public debt effectively, maintaining it at low levels or reducing high debt to sustainable thresholds.

Under EU treaties, Member States are required to keep their budget deficits below 3% of their gross domestic product (GDP) and their public debt below 60% of GDP. However, recent data for 2023 showed that all states now facing these procedures recorded deficits exceeding these limits: Italy (-7.4%), Hungary (-6.7%), Romania (-6.6%), France (-5.5%), Poland (-5.1%), Malta (-4.9%), Slovakia (-4.9%), and Belgium (-4.4%).

By the end of the year, the Council will consider adopting, based on the European Commission’s recommendations, conclusions urging these Member States to take effective measures to reduce their deficits within a specified timeframe. These recommendations are expected to include precise budgetary adjustment paths and deadlines. The Commission is anticipated to present its recommendations around November.

This move follows a four-year hiatus in enforcing these rules due to the activation of the general escape clause from 2020 to 2023 in response to the Covid-19 pandemic. Last June, the Commission identified 12 Member States with deficits exceeding the 3% threshold or at risk of doing so, marking a renewed focus on fiscal discipline within the EU.