(Finance) – After a revision which saw previous estimates reduced three times, the new European economic forecasts reveal a
certain optimism. The Commission’s comprehensive spring economic forecast, with an update also on the expectations on what the deficit and debt trends will be, will integrate the data that the community executive will use to process the adjustment request to the countries on the basis of the new Stability Pact, with the expected reference trajectories on 21 June, on which the countries will then have to present the multi-annual spending plans for 20 September. Excessive deficit procedures will then be formally opened on 19 June as part of the European Semester spring package. There April photo by Eurostat has already indicated a deficit over 3% for eleven EU countries who are now at risk of a yellow card from Brussels.
There European Commission reiterates that countries that have only slightly exceeded the 3% limit on the deficit-GDP ratio, and only temporarily, could avoid the opening of an excessive deficit procedure. An evaluation by the European Commission is still underway on the progress of the excessive deficit procedure of the EU States based on the deficit thresholds above 3% of GDP envisaged by the Treaties. But this is part of an analysis that the Commission will carry out in the next months – said the Vice President of the European Commission Valdis Dombrovskis, in the press conference at the end of the Ecofin, asked in particular about the discretion of the executive on procedures with respect to countries just above the 3% threshold -. The evaluation of the fiscal performance of the States by the European Commission is still ongoing and our proposal on the launch of excessive deficit procedures will be announced as part of the European Semester spring package which is currently scheduled for 19 June. As regards the evaluation criteria of the procedures on excessive deficit, based on the reference value set by the treaties of 3% of GDP, in case the exceeding of the reference threshold of 3% is small and temporary, there is also the possibility of evaluating the relevant factors which could also lead to the conclusion of not opening the procedure for excessive deficit”.
In recent months the EU Commission had indicated 11 countries as subject to a future proposed procedure for excessive deficit, given that they had deficit/GDP ratios above 3% for 2023 are: Belgium, Czech Republic, Estonia, Italy, Hungary, France, Spain, Malta, Poland, Romania and Slovakia. Italy ended 2023 with a budget deficit of 7.4% of GDP, the highest in the EU. According to the Def presented by the government in April, the deficit is expected to reduce to 3.7 percent in 2025 and 3% in 2026. The EU Commission will present its updated forecasts tomorrow, but precisely, as reiterated by Dombrovskis, it will decide on the procedures for excessive deficit only after the European elections.
In the first quarter of the year the eurozone gross domestic product recorded growth of 0.3%, as in the EU and Italy. Growth in Germany was 0.2% (Eurostat data). The February economic estimates of the European Commission indicated that growth of 0.8% was expected for the Eurozone in 2024, 0.9% for the EU, and 0.7% for Italy (the expected in the Def is 1%). For 2025, however, the Commission said in February to expect growth of 1.5% for the eurozone, 1.7% for the EU, 1.2% for Italy (as in Def). As for the IMF’s April forecasts, it indicated growth for the euro area of 0.8% this year and 1.5% next year, stating that it expected Germany’s GDP to be +0.2% this year. year and +1.3% the next, with Italy growing by 0.7% in both 2024 and 2025.