The EU slowly exits from “Excessive Deficit Procedure” and hopefully from ‘Excessive Austerity Procedure’ too

Jose Manuel Barroso, President of the European Commission (EC Audiovisual Services)

Jose Manuel Barroso, President of the European Commission (EC Audiovisual Services)

Earier this week, on the 2nd of June, the European Commission (EC) decided to recommend to the EU Council of Finance Ministers to close the Excessive Deficit Procedure (EDP) for six countries. The reason why Austria, Belgium, Czech Republic, Denmark, the Netherlands and Slovakia must exit EDP is because these countries managed to lower their deficits under 3% of GDP.

Excessive Deficit Procedure

This is a procedure that was settled in the Treaty on the Functioning of the European Union in order to make sure that the Member States correct gross fiscal policy errors. The two fundamental pillars of this process are first to ensure that the general government deficit lies under 3% of GDP and second the gross government debt under 60% of GDP. If these criteria are breached, then the opening of an EDP is characterised as justified. Furthermore, the countries that are under EDP supervision by the Economic and Financial Affairs Council (ECOFIN) must follow EC’s recommendations and materialize them in a specific time frame.

Member states under EDP

There has been a significant change in the number of the counties that were under EDP surveillance since 2011. In 2011 around 24 countries were in EDP whereas now the number is reduced to 17 with the prospect of further decrease to 11 if the EU Council of Finance Ministers will accept the EC’s recommendations at its meeting on 20 June in Luxembourg. Apart from the six Member States already mentioned in the beginning, Bulgaria, Germany, Estonia, Italy, Hungary, Latvia, Lithuania, Luxembourg, Romania, Finland and Sweden are also out of EDP’s supervision.

Numbers and not people

The efforts and sacrifices made across Europe have started to pay off,” said Jose Manuel Barroso, European Commission’s president. The sayings of the president are reasonable if we take into account the fact that six more countries are into consideration to exit the EDR. However, if we take a closer look and not just stay in the threshold of 3% deficit of GDP, we would see the debt to GDP is not lowered enough (remains above 60%) to be in line with EDP’s reference points. Moreover, austerity measures that are leading to low deficits are contributing to unemployment rise in the short-run which is increasing “socioeconomic safety nets”, programs that each government has to follow to help poor people not drop below poverty levels. Consequently, spending cuts lead to higher debt to GDP ratios and unemployment rates which have a negative effect on the well-being of EU citizens.

The Dutch example

One of the counties to be a good paradigm in this sense is the county of tulips. Even if the Netherlands is one of the strongest economies in the EU and potentially the world, it was strongly hit by the European debt crisis.  The country entered the EDP in 2009 when the government’s deficit reached at 5.6% of GDP. The deadline that was set to reduce it in levels lower than 3% was extended till 2013. The government managed to accomplish this goal resulting to a deficit of GDP of 2.5% in 2013. Furthermore, the EC’s forecasts for 2014 and 2015 are that the deficit will reach 2.8% and 1.8% of GDP respectively.

All these seem ideal for EU fiscal policies but what about the people that are enduring these austerity measures for all these years? Was there no other way? A few weeks ago during the exclusive Sting’s interview at EBS 2014, The President of the European Socialists and Democrats, Hannes Swoboda, said: “Austerity was not the alternative”. The deficit’s decrease comes at greater costs. High unemployment rate of 7.2% (Eurostat, April 2014), cuts on healthcare expenditures and public wages and heavier taxation are only a few horrible consequences to mention. Thus, like many European Dutch people and also expats who live in the Netherlands sustain austerity measures hoping that growth will come.

Let’s see who comes first though, growth or despair.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Egyptian death sentences a ‘gross miscarriage of justice’: UN human rights chief

3 hard-won lessons from a decade of negative cleantech returns

Digital IDs and the Digital Economy: the (still) missing link?

EU sets ambitious targets for the Warsaw climate conference

UN chief ‘deeply concerned’ by military escalation in northwest Syria

Long-term EU budget: MEPs slam cuts to culture and education

EU leaders agree to delay Brexit until 31 October

Why businesses are nothing without strong human rights

Human Rights breaches in Saudi Arabia, Chechnya and Zimbabwe

EU cross-border payments outside Eurozone: MEPs scrap excessive fees

Can the EU afford a trade war with China?

EU Council approves visa-free travel for Ukraine and cement ties with Kiev

Dear China

International Day of the Midwife: 5 things you should know

‘Preserve, revitalize and promote’ indigenous languages, or lose a ‘wealth of traditional knowledge’, UN chief says

Superbugs: MEPs advocate further measures to curb use of antimicrobials

The Sting’s Mission

UN chief welcomes DR Congo President’s promise to stand down

Parliament commemorates the liberation of Auschwitz 75 years ago

4 climate tipping points the planet is facing

The EU Consumer Policy on the Digital Market: A Behavioral Economics View

7 ways business can be agents for peace

A record number of College members travel to Addis Ababa for the 10th European Union-African Union Commission-to-Commission meeting

Eurozone: The cycle of deficits, debts and austerity revisited

Bacteria vs. humans: how to fight in this world war?

Virtual Doctor: a core part of modern healthcare?

Building cybersecurity capacity through benchmarking: the Global Cybersecurity Index

We are on the edge of a new ‘cyber’ space age. This is how we make it a success

A Sting Exclusive: China’s Foreign Minister Wang Yi on South China Sea issue at the ASEAN Regional Forum

Let us keep ‘their spirit of service alive’: Guterres leads tributes to UN workers who died in Ethiopia crash

A guide to thriving in the post-COVID-19 workplace

The Commission sees ‘moderate recovery’ but prospects deteriorate

How to survive and thrive in our age of uncertainty

This Danish scheme is offering free kayak rides… for picking up trash

Ending extreme poverty crucial to sustainable future for all: UN chief

These 4 scenarios show how we might be working in the future

In Tunisia, budding entrepreneurs can take a year off their job

Bayer-Monsanto merger: the story of the rise of the “endless company”

Facebook-Cambridge Analytica: MEPs demand action to protect citizens’ privacy

Climate change and health: an everyday solution

The mother of all fights about inflation, growth and banks

Ukraine: The West and Russia negotiate shares of influence

UN chief hopes for new agreement after Israel concludes international observation mission

State aid: Commission approves €286 million Finnish measure to recapitalise Finnair

Euronest: delivering reforms is the best way forward for EU’s Eastern Partners

Doctors are humans too: the benefits of embracing your mental status

MEPs call for decisive action to fight inequalities in the EU

Seize the opportunities of digital technology to improve well-being but also address the risks

What if nature became a legal person?

UN allocates $20 million in emergency funding, as Cyclone Idai disaster unfolds

Cultural tolerance is a must: “No sir, I’m not inferior!”

The EU invites the US and Russia to partition Ukraine

Larger species are more at risk of extinction than smaller ones – here’s why

Long-term EU budget: The Union’s ambitions must be matched with sufficient reliable funding

MWC 2016 Live: Industrial world prepares to reap digital benefits

Roaming market review: use of mobile phones abroad has surged since end of EU roaming charges

Trump stumbles badly on his Russian openings; Europeans wary of Putin

The European Sting live from the World Economic Forum 2015 in Davos

EU budget: Commission proposes most ambitious Research and Innovation programme yet

4 steps towards wiping out cervical cancer

More Stings?

Advertising

Comments

  1. We are a gaggle of volunteers and starting a new scheme in our community.

    Your site provided us with valuable information to work on. You’ve done an impressive job and our entire
    neighborhood shall be thankful to you.

  2. If some one desires to be updated with most up-to-date technologies after that he must be pay a visit this website and be up
    to date everyday.

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s