European Council yet to approve Hungarian plans in Excessive Deficit Procedure

Today the Council adopted recommendations for seven countries to correct their excessive deficit situation within a set time period: Belgium, France, Italy, Malta, Poland, Slovakia and Romania, the Council announced after an Ecofin meeting on Tuesday.

Although Hungary's amended compromise medium-term fiscal-structural plan, presented by the government, was adopted by the Commission last Friday, it was not yet voted on by the Council on Tuesday.

It was already foreseeable that the document on Hungary's excessive deficit procedure (EDP) would only be discussed at the February Ecofin meeting.

The recommendations contain a corrective budgetary path, expressed in numerical terms, and a deadline, for each member state. These are in line with each member states’ objectives, expressed in their medium-term fiscal-structural plans, submitted in the context of the implementation of the EU’s new economic governance framework.

The Council recommends that Italy should put an end to the excessive deficit procedure by 2026, Belgium, Malta, and Slovakia by 2027, Poland by 2028, France by 2029, and Romania by 2030.

Member states must comply with budgetary discipline on the basis of criteria and reference values set in the EU Treaties: their deficit should not exceed 3% of their gross domestic product (GDP) and their debt should not exceed 60% of their GDP. All member states have to respect these Treaty reference values.
If an excessive deficit occurs in a member state, the aim of the excessive deficit procedure is to prompt its correction by putting member states under enhanced scrutiny and providing recommendations for them to take effective action to correct the deficit. Ultimately, the goal is to strengthen member states’ debt sustainability.
Under the new economic governance framework, once an excessive deficit procedure has been launched, the Council shall make a recommendation to the member state concerned to take effective action to bring the situation of excessive deficit to an end within a set deadline.
In its recommendation, the Council shall also request that the member state implements a corrective net expenditure path which ensures that the general government deficit is brought and maintained below the 3% of GDP reference value within the deadline set in the recommendation.

Under the new rules, in force since 30 April 2024, member states are required to prepare medium-term fiscal structural plans, setting out their expenditure paths and their priority reforms and investments for the next 4-7 years.

• Belgium should ensure that the nominal growth rate of net expenditure does not exceed 2.4% in 2025, 1.9% in 2026 and 2.0% in 2027. 
• France should ensure that the nominal growth rate of net expenditure does not exceed 0.8% in 2025, 1.2% in 2026, 1.2% in 2027, 1.2% in 2028 and 1.1% in 2029.
• Italy should ensure that the nominal growth rate of net expenditure does not exceed 1.3% in 2025 and 1.6% in 2026.
• Malta should ensure that the nominal growth rate of net expenditure does not exceed 6.0% in 2025, 5.8% in 2026 and 5.8% in 2027.
• Poland should ensure that the nominal growth rate of net expenditure does not exceed 6.3% in 2025, 4.4% in 2026, 4.0% in 2027 and 3.5% in 2028.
• Romania should ensure that the nominal growth rate of net expenditure does not exceed 5.1% in 2025, 4.9% in 2026, 4.7% in 2027, 4.3% in 2028, 4.2% in 2029 and 3.9% in 2030.
• Slovakia should ensure that the nominal growth rate of net expenditure does not exceed 3.8% in 2025, 0.9% in 2026 and 1.6% in 2027.

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