Even countries with low levels of debt are at high risk of adopting austerity measures under plans approved today by EU finance ministers.
The European Commission announced last month that it is opening a ‘Excessive Deficit Procedure’ for Belgium, France, Italy, Hungary, Malta, Poland and Slovakia.
Four of those countries have a debt to GDP ratio below the 60% target set by the EU and four countries have also reduced their deficit over the last year.
Despite that, the Commission’s decision was rubberstamped today by national ministers attending the Economic and Financial Affairs Council configuration (ECOFIN).
| Belgium | France | Hungary | Italy | Malta | Poland | Romania | Slovakia | |
| Debt |
105.2 |
110.6 |
73.5 |
137.3 |
50.4 |
49.6 |
50.9 |
56 |
| Deficit 2023 |
4.4 |
5.5 |
6.7 |
7.4 |
4.9 |
5.1 |
6.6 |
4.9 |
| Deficit 2024 |
4.6 |
5.3 |
5.4 |
4.4 |
4.3 |
5.4 |
6.9 |
5.9 |
During the debate on the new fiscal rules, the ETUC was among actors which called for investment on EU policy goals on climate action or socials standards to be exempted. The Bruegel think tank also warned the new rules “will unduly constrain increases in investment to meet the EU’s climate and other goals.”
However, no consideration has been given to these factors in the decision to open an Excessive Deficit Procedure. In fact, the Council has explicitly criticised the countries concerned for social spending.
In the case of Spain, spending on the pension system is singled out for criticism despite the fact investments remain at a modest 2.3% of GDP and are largely absorbed by reductions in military expenditure. In the decision on Poland, spending on public sector wages and pensions is seen as an aggravating factor while military expenditure is seen as a mitigating factor.
What concrete actions the seven counties concerned will need to take to reduce their deficits will be decided at a later date.
ETUC Confederal Secretary Ludovic Voet said:
“It appears policymakers have learned nothing from the European elections, which showed that we urgently need to resolve the economic and social insecurity behind growing anger in society.
“Today’s decision means the EU risks prompting austerity measures in countries which have perfectly sustainable debt levels and falling deficits.
“This illogical position will prevent member states from meeting even the EU’s own targets on tackling climate change or raising social standards.
“Despite a long debate on the new fiscal rules, during which policymakers expressed good intentions to make sensible reforms, we are left with the same myopic focus on numerical benchmarks that does not leave space for any other consideration.
“It confirms that trade unions were right to oppose the new fiscal rules and will fight new austerity measures every step of the way.”
