European Commissioner for Economic and Financial Affairs Pierre Moscovici talks to journalists during a news conference at the European Commission headquarters in Brussels, Thursday, Nov. 7, 2019. The European Union's executive branch has cut its growth forecasts for the 19-country eurozone for this year and next and warned that conditions could worsen in the face of an array of uncertainties. (AP Photo/Francisco Seco)

In first since 2002, EU not forcing any states to cut debt

November 20, 2019 - 6:41 am

BRUSSELS (AP) — For the first time since 2002, the European Commission is not taking legal action against any of its members over high budget deficits or debt, and is instead encouraging some to spend more to help the economy.

The EU’s executive arm said Wednesday that eight countries were at risk of significantly falling short of the bloc’s aim for a deficit below 3% of GDP and debt approaching 60%.

They include Spain, France, Belgium and Italy, which it said have not sufficiently used good economic times to repair their public finances.

“This is worrying because very high debt levels limit the capacity to respond to economic shocks and market pressures,” said Valdis Dombrovskis, the commission vice president.

However, the commission isn’t taking legal action to push any countries to tighten finances. It most recently did that against Italy, whose last government had increased spending sharply despite its huge debts.

The commission encouraged countries with strong finances, particularly Germany and the Netherlands, to spend more. With growth slowing, experts say governments need to investment more.

The European Central Bank has pressed that point repeatedly. It unveiled a new stimulus package in September but says it can only do so much to help the economy and needs governments to help as well.

AP Editorial Categories: 
Comments ()
Tags: