The Focus offers a brief survey of the budget strategies of the Member States presented to the EU last April, for which the European Council of 28 and 29 June broadly confirmed the recommendations of the European Commission and the Ecofin Council, launching the “European Semester” in conclusion. In the second half of the year, the countries will therefore have to implement policies consistent with those recommendations.
We can offer a number of general comments: the Stability and Convergence Programmes continue the strategy of reducing the actual deficit and public debt as a ratio of GDP. No country forecasts that their deficit in 2017 will be in excess of the threshold of 3 per cent of GDP. As expected, progress towards compliance with the threshold of 60 per cent for the debt/GDP ratio will be slower. Owing to more favourable cyclical conditions, on average the improvement in actual terms does not translate into a similar improvement in structural terms, although there are considerable differences among countries. The structural adjustment effort in 2016-17 appears to be strongly correlated with the divergence between the structural balance and the medium-term objective (MTO), underscoring the importance, at least in ex-ante intentions, of the MTO as an anchor for the consolidation policies of the Member States. Conversely, the correlation between the structural adjustment and cyclical conditions in the Member States and that between the structural adjustment and the level of the public debt as a percentage of GDP is close to zero. The relative easing of the structural budget adjustment is confirmed in the Stability Programmes of the main euro-area countries: while Germany remains in compliance with the EU rules, it plans to eliminate its surplus by increasing expenditure, while France and Spain intend to achieve improvements in the actual deficit thanks almost exclusively to the improvement in the economic cycle, even though that is not entirely in line with the EU recommendations. Finally, the Netherlands plan to ease the structural balance in 2016, which will only be partially offset by a correction of the opposite sign in 2017.
Text of document (in Italian)