Italy in excessive deficit procedure as of July 26

Brussels – Economy and finance ministers meeting in Brussels for the Ecofin Council, the first under the Hungarian presidency, are of the view that they should support the EU Commission’s request to proceed with an excessive deficit procedure against Italy, Belgium, France, Hungary, Malta, Poland, and Slovakia. There is no formal decision, so the procedure will not kick in immediately since, due to time constraints, they decided to hold an orientation debate. The decision has been postponed to the Coreper meeting on July 24, when ambassadors will inform the economic ministers, who will have to approve it by written procedure. The process is expected to conclude on July 26, when the twelve-star monitoring will begin.

However, Economy Commissioner Paolo Gentiloni is keen to point out that “it is too early to talk about fines against member states,” as provided by the excessive deficit procedure and the rules of the new Stability Pact. There has been a downward revision of the new shared economic policies and public accounts rule. The principle is to reduce the size of fines for those who fail to correct excessive deficits, but since they are lower,  they will be enforced.

In case of slippage or insufficient reduction commitments, penalties of 0.05 percent of national GDP may be applied every six months for eventual fines reaching 0.1 percent of GDP per year (instead of a non-interest-bearing deposit of up to 0.5 percent of GDP, as provided so far). However, Gentiloni noted that these are distant scenarios. “We are not referring to fines, but to the start of a process that is long.” The excessive deficit procedure, he stresses, “takes a long time,” which will begin to be calculated when the formal decision to endorse the EU executive’s recommendation is made.

Eyes are, therefore, on the EU Council. By the end of next week, Italy and the other six countries should officially find themselves in the EU’s corrective arm. Economy Minister Giancarlo Giorgetti makes no fuss and reassures partners. “We consider it crucial to respect the new European budget rules.”