BRUSSELS officials have piled pressure on European Union governments to put their public accounts in order on 7 October by initiating excessive deficit procedures against Germany and eight other member states.
According to the European Commission’s latest estimates, the budget deficits of Austria, Belgium, Czech Republic, Germany, Italy, the Netherlands, Portugal, Slovakia and Slovenia are all expected to violate the EU’s Stability and Growth pact, which sets a deficit limit of 3% of a country’s gross domestic product.
While acknowledging that governments had increased their public spending to mitigate the impact of the economic crisis, the commission concluded that the countries’ excessive deficits were neither “exceptional” nor “temporary”.
The Commission has already initiated similar procedures against a further 11  EU countries, including France and Spain,  the budget deficits of which had already exceeded the limit in 2008. “A large majority of  member states are set to have budget deficits above 3% of GDP in 2009 as a result of the economic crisis. We need to continue supporting the economy until the recovery takes hold, in line with the European Economic Recovery Plan,” said Economic and Monetary Affairs Commissioner Joaquín Almunia. “But now is also the moment to design co-ordinated exit strategies so that, when the moment is right, we can begin to roll back the soaring debt levels,” he added. “It is essential to keep applying [the pact] rigorously in order to anchor expectations that the excessive deficits will be corrected in an orderly way,” he said.
According to the Commission’s estimates, Germany’s deficit is expected to reach 3.9% this year and 5.9% in 2010. Such figures are unlikely to make it any easier for the country’s incoming centre-right coalition government to approve deep tax cuts, as promised during its successful election campaign.
The Commission estimated a deficit of 4.5% for Italy, although the country’s latest Economic and Financial Planning Document (DPEF) predicts a higher deficit of 5.3%. The deficits of the other countries targeted by the report range from 3.4% in the Netherlands to 6.5% in Portugal. Of the remaining seven EU members whose deficits still need to be examined by the Commission, Estonia and Sweden are those at greatest risk of breaking the pact’s limit.