November 21, 2019 - 15:42 AMT
PanARMENIAN.Net - Brussels has warned France and Italy that they are running stubbornly high levels of public debt, meaning their future budgets risk breaching EU rules and alarming investors, Financial Times reports.
The European Commission on Wednesday, November 21 published its opinion on the 2020 draft spending plans of all eurozone member states. It had harsh words for Paris, Rome and Madrid which, it said, had failed to make use of good economic times to chip away at their debt burdens.
Valdis Dombrovskis, commission vice-president in charge of the euro, said France, Italy and Spain — as well as Belgium — were “not expected” to meet the EU’s debt reduction targets for next year.
“In 2020, they plan either no meaningful fiscal adjustment or even a fiscal expansion,” said Mr Dombrovskis. “This is worrying because very high debt levels limit the capacity to respond to economic shocks and market pressures.”
The four governments were “not taking sufficient advantage of recent declines in interest expenditure in order to reduce their debt ratios”, the commission said.
“Failure to reduce public debt may increase the risk of heightened market pressure on countries with high public debt in the future, which could have negative spillover effects on the public debt markets of other euro-area member states,” said the commission’s assessment.
The debt warning is particularly acute for France and Italy — the eurozone’s second- and third-largest economies; Brussels also gave notice to the caretaker administration in Spain, although it is waiting for a new government in Madrid to put together a budget before making a final judgment.
Last month, Brussels wrote to Italy’s centre-left/Five Star coalition and Emmanuel Macron’s government in France saying that their 2020 spending plans risked “significant deviation” from EU rules.