The EU has reinstated its controversial programme against lavish government deficits – with France, Belgium and Italy likely candidates in the firing line.
The European Commission will later today (19 June) unveil an economic package focused on the members it sees as having excessively high budget deficits, a move likely to have explosive political consequences.
Brussels’ fiscal rules were designed to ensure the euro’s stability – and gained extra prominence when a crisis in Greece and Cyprus sent the currency into a tailspin around a decade ago.
They were suspended when Covid-19 made large government spending packages the norm – but, after much wrangling, a more flexible version of the rules was agreed earlier this year.
Under the EU’s treaty, countries can be fined if they fail to cut government spending or raise taxes enough – and it’s easy to see which countries might be in the firing line.
But that could prove significant as France, predicted to have a deficit of 5% of its economy next year, heads to legislative elections.
Stay tuned for the latest on who’s likely to be targeted.
