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European Commissioner for Economic and Monetary Policy
Excessive deficit procedure – "Effective Action
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Press Conference – speaking points
Strasbourg, 15 June 2010
Today Commission assessed the action taken by 12 member states in response to the Council recommendations of December 2009 to correct excessive deficits. These are: Belgium, the Czech Republic, Germany, Ireland, Spain, France, Italy, the Netherlands, Austria, Portugal, Slovenia and Slovakia. All recommendations take into account the exceptional economic circumstances and are based on the medium-term framework.
The current budgetary targets, including those revised recently, appear to ensure an appropriate overall fiscal stance in the EU.
In all cases we conclude that the measures taken were sufficient to achieve the 2010 targets. In most cases, we also issue an invitation to specify, as soon as possible, measures to substantiate the targets for the years beyond 2010.
The Commission also asses, that there are now new excessive deficits in Denmark, Finland and Cyprus, and recommended deadlines for their correction to the Council (Denmark 2013, Finland 2011, Cyprus 2012).
In the current financial and economic context, Europe pursues a coordinated and differentiated strategy of fiscal exit, in order to put on track a decisive fiscal consolidation, to solidify the ongoing economic recovery, and to implement structural reforms to lift potential growth and enhance employment.
In other words, fiscal consolidation in the EU is pursued in a coordinated and differentiated way. Countries with no or little fiscal space do accelerate fiscal consolidation immediately, while those with better fiscal space will start consolidation from next year onwards. In other words, the overall EU fiscal stance should become restrictive as of 2011, when the economic recovery is expected to gain a stronger momentum.
New fiscal measures announced recently in several EU member states are in line with this strategy of differentiated consolidation.
Let me say a few words on the countries assessed:
After a postponement by 1 year due to adverse economic conditions, France and Spain were recommended to correct by 2013 and Ireland by 2014.
The Czech Republic, Slovenia and Slovakia, were asked to start consolidating in 2010 in line with their national plans and to correct by 2013. Belgium and Italy were also asked to start in 2010 and to correct by 2012 given the high and rapidly increasing debt-level.
Finally, Portugal was asked to start correcting in 2010 and to consolidate by 2013, given the high and rapidly increasing debt and the large current account.
Austria, Germany and the Netherlands, which have maintained a better fiscal space, were asked to start consolidating in 2011 and to correct the excessive deficit by 2013.
Portugal and Spain have recently decided on new revised deficit targets for 2010 and 2011, which are appropriate and ambitious.
For both countries this year 2010, the recently announced measures are sufficient to meet the new targets.
For 2011, Portugal will need to substantiate the new target with concrete measures of about 1½ % of GDP to reach the deficit target of 4.6 % in 2011. These concrete measures should be included in the budget for next year. Portugal is also accelerating structural reforms especially in the areas of education and healthcare and reducing red tape for enterprises.
For 2011, Spain will need to specify concrete measures of about 1¾% of GDP to reach the deficit target of 6% in 2011. The newly announced expenditure ceilings will pave the way for this, and these concrete measures should be included in the budget for next year. Spain is also pursuing substantial structural reforms in the areas of the labour market and the pension systems.
We welcome the commitment of both Governments to do everything it takes to meet the revised budgetary targets, as well as their pursuit of structural reforms. Our assessment should be taken as early guidance for next year’s budget, in line with the recent proposals to reinforce economic governance in the EU.
Let me finally say a few words in the two languages of the country I know best, which will be in the excessive deficit procedure for the first time ever during the euro era.