Eurozone countries surpassing their allowable deficit of 3% GDP

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What happens when a eurozone country breaks EU fiscal rules that limit the allowable deficit to 3% of GDP?

Austin Conlon

Posted 2016-11-18T02:00:57.333

Reputation: 162

Nothing happens immediately. Fines can be given for members that have exceeded the 3% limit and not implemented sufficient corrective measures. This can take years. So excessive deficit procedures have been opened many times but most countries (if not all) applied sufficient measures to recover from the excess. Today only Cyprus is above the 3% limit. – armatita – 2019-05-02T13:21:41.527

Answers

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Empirically: nothing.

Most states have at one time or another broken the limit. France hasn't met the limit since 2007. There has not been a single measure taken by the EU.

The deficit "limit" of 60% is also merely theory, with the EU on average being at 90%. This is of course less realistic to enforce on short notice, but the EU does not even enforce the "60% or decreasing" rule.

MSalters

Posted 2016-11-18T02:00:57.333

Reputation: 4 180

While this seems to be the correct answer, it might be helpful to indicate which EU body (bodies) has (have) the power to impose those fines. – JJJ – 2019-04-27T00:22:14.307

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(-1) This answer is simply incorrect. The EU has a range of tools and as a matter of fact, it has opened a number of “Excessive deficit procedures” resulting in a number of reports, warnings and corrective measures.

– Relaxed – 2019-04-29T20:40:47.800

@Relaxed: Oh, yeah. The scourge from Brussels, the sternly worded letter. That's why Macron is now raising taxes and lowering expenses. Except, that's the other way around. – MSalters – 2019-04-29T23:58:21.163

@MSalters It remains a fact that the EU took several measures, what you seem to believe is that it should have taken different measures. That's an entirely different and somewhat naive argument (very much including your “analysis” of recent French policy decisions). Meanwhile, sarcasm doesn't make your answer accurate or informative... – Relaxed – 2019-04-30T08:09:48.940

1Notice that the point of those rules is to help countries go back to sustainable levels of deficit, not punish them. No nation is fined for exceeding a 3% deficit , nations are fined for exceeding that value and do nothing about it (none or insufficient corrective measures). That being said, those measures must have worked since today only Cyprus exceeds the 3%, and the EU28 deficit almost halved in one year (0.6 for EU28, 0.5 for eurozone). – armatita – 2019-05-02T13:06:13.687

Is there some measure that the EU rules recommend be taken when in this case? Even if EU nations don't actually do it in practice? – Sam I am says Reinstate Monica – 2016-12-06T15:28:17.360

@SamIam: The EU should be imposing sanctions/fines, according to its own rules. – MSalters – 2016-12-11T19:38:16.990

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Fun fact: There has not been a single member that complied with all the requirements of joining the EU when they joined. But as long as the countries attempt to make progress and are not problematic, the EU doesn't intervene.

Lovapa

Posted 2016-11-18T02:00:57.333

Reputation: 79