Two EU countries to submit debt reduction plans by Commission's deadline
By Jan Strupczewski
BRUSSELS, Sept 18 (Reuters) -Only Malta and Denmark will submit their debt reduction plans to the European Commission by the initial September 20 deadline set by the EU's new fiscal rules, with most other governments planning to do so in October and France even later, EU officials said.
The delay is a setback for the credibility of the new rules, in force since April, because they are meant to show markets how EU governments, many of which are saddled with high public debt after the COVID-19 pandemic and energy crisis, want to put debt on a declining path over four to seven years.
In June, the European Commission sent each EU country with public debt above the EU ceiling of 60% of GDP suggestions on the path of its reduction.
Governments have until September20 to submit back to the Commission an agreed debt-cutting trajectory along with planned reforms and investments that would make it possible.
But EU officials close to the process said many EU countries either faced elections or did not yet have governments after recent elections that could to sign off such plans, which was an acceptable excuse to get more time.
Only Malta and Denmark would meet the deadline, while 20 other countries - Bulgaria, Croatia, Czechia, Germany, Hungary, Estonia, Ireland, Greece, Spain, Italy, Cyprus, Latvia, Luxembourg, Netherlands, Poland, Portugal, Slovenia, Slovakia, Sweden, Finland - would do so in October, officials said.
Many of those would use the separate October 15th deadline for the submission of draft 2025 budgets to the Commission to attach their debt reduction, reform and investment plans to them, officials said.
The five remaining countries -- Lithuania, Romania, Belgium, France and Austria -- would need even more time, officials said.
France, which at the end of June saw a jump in the premium investors want to hold its bonds over uncertainty about the outcome of snap parliamentary elections, needs more time because it still does not have a new government and the fragile ruling coalition will have a hard time pushing through debt cuts.
Italy, the country with the second-highest public debt in Europe, will have regional elections in October and November and the right-wing government is now promising tax cuts and help for families and employment in 2025.
Germany is facing elections in 12 months and EU officials said Berlin was undecided what to propose in its long-term plan.
The situation is also unclear in Lithuania, which has elections next month, and in Belgium, which is still without a government after elections in June. Austria will have elections at the end of September and Romania in December.
Once all the plans are submitted to and accepted by the Commission, they will be approved by EU finance ministers in December and January.
Reporting by Jan Strupczewski
Editing by Alistair Bell
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
