Council launches excessive deficit procedures against seven member states

The Council adopted decisions establishing the existence of excessive deficits for Belgium, France, Italy, Hungary, Malta, Poland and Slovakia.

In addition the Council established that Romania, which is under the excessive deficit procedure since 2020, has not taken effective action to correct its deficit and therefore the procedure should remain open. 

The deficit-based excessive deficit procedure aims to ensure that all member states return to or maintain discipline in their governments’ budgets, and avoid running excessive deficits. Ultimately, the goal is to maintain low government debt or reduce high debt to sustainable levels. 

Member states must comply with budgetary discipline on the basis of criteria and reference values set in the EU Treaties: their deficit should not exceed 3% of their gross domestic product (GDP) and their debt should not exceed 60% of their GDP. All member states have to respect these Treaty reference values. 

If an excessive deficit occurs in a member state, the aim of the excessive deficit procedure is to prompt its correction by putting member states under enhanced scrutiny and providing recommendations for them to take effective action to correct the deficit. 

Next steps

Towards the end of the year, the Council will be invited to adopt, on a recommendation from the Commission, recommendations addressed to the member states to take effective action to correct their deficit within a given time period. The recommendations may contain a corrective budgetary path, expressed in numerical terms, and a deadline.

The Commission is expected to present recommendations for Council recommendations around November, at the same time as it intends to submit the European Semester Autumn package. 

This year, exceptionally, the timing of recommendations to member states in excessive deficit procedure to take effective action will be aligned with the provisions of the EU’s reformed economic governance framework. Under the new rules, in force since 30 April, member states will prepare medium-term fiscal structural plans in the autumn, setting out their expenditure paths and their priority reforms and investments for the next 4-7 years. 

The objective is to align the Council recommendations under the excessive deficit procedures with those under the medium-term fiscal-structural plans. 

Background

Based on reported and confirmed data for the year 2023, all member states which are now subject to an excessive deficit procedure ran, in 2023, a general government deficit that exceeded the Treaty reference value: