European Council Finds Excessive Deficits in Belgium, France, Italy, and More
The European Council has identified excessive deficits in several countries, including Belgium, France, Italy, Hungary, Malta, Poland, and Slovakia. Romania, which has been under scrutiny since 2020, has not taken effective action to correct its deficit, so the procedure remains open.
What is the Excessive Deficit Procedure?
The excessive deficit procedure aims to ensure that all member states maintain discipline in their budgets and avoid running excessive deficits. The goal is to keep government debt low or reduce high debt to sustainable levels. According to EU Treaties, a country’s deficit should not exceed 3% of its GDP, and its debt should not exceed 60% of its GDP.
2023 Deficit Data
| Country | Deficit (% of GDP) |
|---|---|
| Italy | -7.4% |
| Hungary | -6.7% |
| Romania | -6.6% |
| France | -5.5% |
| Poland | -5.1% |
| Malta | -4.9% |
| Slovakia | -4.9% |
| Belgium | -4.4% |
All these countries exceeded the Treaty reference values in 2023, leading to enhanced scrutiny and recommendations for corrective actions.
Doubts Revealed
European Council -: The European Council is a group of leaders from European Union countries who meet to set the EU’s overall political direction and priorities.
Excessive deficits -: An excessive deficit means that a country is spending more money than it earns, which can be bad for its economy.
Belgium, France, Italy, Hungary, Malta, Poland, Slovakia, Romania -: These are countries in Europe. They are part of the European Union, which is a group of countries that work together on many issues.
Deficit -: A deficit happens when a country spends more money than it makes, like when you spend more pocket money than you get.
GDP -: GDP stands for Gross Domestic Product. It is the total value of all goods and services produced in a country in a year.
Debt -: Debt is the amount of money a country owes to others. It’s like when you borrow money from a friend and have to pay it back later.
Excessive deficit procedure -: This is a set of rules that the European Union uses to make sure countries don’t spend too much money and get into financial trouble.
Budget discipline -: Budget discipline means managing money carefully so that spending does not exceed income, just like how you manage your pocket money.
3% of GDP -: This means that a country’s deficit should not be more than 3% of its total yearly production of goods and services.
60% of GDP -: This means that a country’s debt should not be more than 60% of its total yearly production of goods and services.
2023 -: This is the current year, and it is when the European Council found that these countries had excessive deficits.
Scrutiny -: Scrutiny means careful and detailed examination. The European Council is closely looking at these countries’ finances.
Corrective actions -: These are steps that countries need to take to fix their financial problems and reduce their deficits.
