EU warns France, Italy and more over unruly budgets

BRUSSELS

The European Union on Wednesday rebuked nearly 10 governments, including France and Italy, over their excessive spending after new budget rules entered into force this year.

It came at a particularly difficult moment for France, where both the far left and far right are piling up spending promises ahead of snap polls triggered by President Emmanuel Macron's crushing EU election defeat.

It was the first time Brussels reprimanded nations since the EU suspended the rules after the 2020 COVID pandemic and the energy crisis triggered by the Ukraine war, as states propped up businesses and households with public money.

The EU spent two years during the suspension overhauling the budget rules to make them more workable and give greater leeway for investment in critical areas like defense.

But two sacred goals remain: A state's debt must not go higher than 60 percent of national output, with a public deficit, the shortfall between government revenue and spending, of no more than 3 percent.

The European Commission published assessments of the 27 EU states' budgets and economies yesterday, and pointed out that some 10 countries including Belgium, France and Italy, have deficits higher than 3 percent.

The EU's executive arm has threatened to launch excessive deficit procedures, which kickstart a process forcing a debt-overloaded country to negotiate a plan with Brussels to get back on track.

Such a move would need approval by EU finance ministers in July.

Countries failing to remedy the situation can in theory be hit with fines of 0.1 percent of gross domestic product (GDP) a year, until action is taken to address the violation.