Commission concludes effective action was taken by twelve Member States in excessive deficit procedure

The European Commission today (16.06.2010) assessed the action taken by Belgium, the Czech Republic, Germany, Ireland, Spain, France, Italy, the Netherlands, Austria, Portugal, Slovenia and Slovakia in response to the Council recommendations of 2 December 2009 relating to the correction of their respective excessive government deficits. The Commission concluded that the authorities have acted in accordance with the recommendations.
“The current economic circumstances call for a coordinated fiscal exit strategy in order to face both the necessity of a decisive fiscal consolidation and the need to sustain the nascent economic recovery. The current budgetary targets, including the revised targets of Spain and Portugal, appear to ensure an appropriate overall fiscal stance for the EU, but there is an evident need to advance more forcefully on the structural agenda. The need to coordinate better and more effectively reinforces our call for reinforced economic governance in Europe “, said Economic and Monetary Affairs Commissioner Olli Rehn.
Context
For all 12 Member States concerned by the Communication, the Excessive Deficit Procedures deadlines and fiscal efforts were fixed in accordance with the fiscal exit strategy principles as agreed by the EU Council in October. All recommendations were framed in a medium-term framework due to the existence of exceptional economic circumstances and also in view of the sheer size of the consolidation needs. For the same reason, the fiscal effort was defined as an annual average.
In line with the Pact, the Council fixed a review clause to assess whether first progress were made towards consolidation on 2 June.
France, Ireland and Spain were put in EDP in April 2009 on the basis of a breach of the 3% threshold in 2008. France and Spain were given up to 2012 to correct their excessive deficit, while the Irish deadline was fixed to 2013. After 6-months, the deadlines for these countries were postponed by 1 year as adverse economic conditions made them impossible to be reached. Thus, France and Spain were recommended to correct by 2013 and Ireland by 2014 implying annual average efforts ranging from 1¼% to 2% of GDP.
Austria, Belgium, the Czech Republic, Germany, Italy, the Netherlands, Portugal and Slovenia. were put in EDP in December 2009 on the basis of a breach of the reference value in 2009. Austria, Germany and the Netherlands, having fiscal space, were asked to start consolidating in 2011 and to correct the excessive deficit by 2013 with an annual average effort ranging from ½ to ¾% of GDP; The Czech Republic, Slovenia and Slovakia, were asked to start consolidating in 2010 in line with their national plans and to correct by 2013. The average annual fiscal efforts ranged from ¾ to 1% of GDP given the somewhat constrained fiscal space; Belgium and Italy were also asked to start in 2010 and to correct by 2012 given the high and rapidly increasing debt-level. Annual average effort was ½ (IT) and ¾% (BE) of GDP; Finally, Portugal was asked to start correcting in 2010 and to consolidate by 2013, implying an annual average fiscal effort of 1¼% of GDP given the well-known challenges, notably a high and rapidly increasing debt and large current account.

Full text (http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/739)