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 The Commission, the EU executive arm, checks draft budget plans of
euro zone countries every year to see if they are in line with the
Stability and Growth Pact, which sets rules for EU budgets.
The rules say a government has to keep the headline budget shortfall
below 3 percent of GDP and strive to balance its books in structural
terms - excluding one-off revenues and spending and the effects of
the business cycle.
To be in line with the rules, each year governments must reduce
their structural deficit by at least 0.5 percent of GDP until they
are close to balance or in surplus.
The Commission pointed the finger this year at Italy, Lithuania,
Austria and Spain.
"The draft budgetary plans of these countries might result in a
significant deviation from the adjustment paths towards the
medium-term objective," it said.
France's 2016 draft budget was broadly compliant, the Commission
said, because the headline deficit was as required.
But France is under an EU disciplinary process, called the excessive
deficit procedure, for having a budget gap higher than 3 percent of
GDP. EU finance ministers set annual fiscal consolidation targets
for countries under this procedure.
The Commission said Paris was at risk of missing these targets and
asked the French authorities to take the "necessary measures within
the national budgetary process" so that the 2016 budget is in line
with EU rules.
The EU executive said however that it will take into account the
further costs incurred by France to boost its security after the
Paris attacks.
"One thing that is clear in the current circumstances is that in
this terrible moment the protection of citizens, the security of
citizens in France and Europe is the priority," the EU commissioner
for economics, Pierre Moscovici, told a news conference in Brussels,
noting that EU rules are flexible and allow to respond to
"unexpected circumstances".
"We will reevaluate all possible budgetary expenses of these new
developments," Moscovici said, adding that "it is too early to say
how they will impact France's budgetary trajectory."
SPAIN AND ITALY
Spain, which faces elections in December, was in bigger trouble.
"The draft budget plan... was found to pose a risk of non-compliance
with the requirements for 2016. In particular, neither the
recommended fiscal effort nor the headline deficit target for 2016
is forecast to be achieved," the Commission said confirming an
opinion issued in October.
It said it had asked Madrid to make sure the budget would comply
with EU rules and asked for a updated draft as soon as possible.
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Italy's draft budget plan is also at risk of non-compliance with EU
fiscal rules, the Commission said in a statement, urging Italy to
take "the necessary measures within the national budgetary process
to ensure that the 2016 budget will be compliant".
Italy has sought in its budget fiscal leeway expected to be approved
by the Commission on the grounds of investments and structural
reforms made by the country.
The Commission will decide formally in May whether Italy's budget
leeway is in compliance.
MIGRANT IMPACT
The Commission also said that the budget costs of the migrant crisis
would be treated as an exceptional circumstance and not counted into
the deficit calculations, but concessions will be made only after
actual expenses are properly assessed.
Italy, Greece, Austria and Germany are all dealing with hundreds of
thousands of asylum seekers from the Middle East and Africa who are
fleeing conflicts and poverty in their countries.
Germany, Italy, Austria, Finland and Belgium have included estimates
of the financial impact of the refugee crisis in their draft budgets
for 2016.
"The stability and growth pact includes a provision for unusual
events outside the government's control. The Commission is willing
to use this provision," the vice president of the EU executive,
Valdis Dombrovskis, told a news conference.
"On the basis of further data provided by authorities we will come
back to this in spring when we will assess again the budget
situation in 2015 and 2016," Dombrovskis added.
Overall, the aggregate euro zone budget deficit is to shrink to 1,7
percent in 2016 from 1.9 percent in 2015. Debt is also to fall
slightly to just below 90 percent of GDP. The Commission said this
represented a neutral fiscal stance.
(Additional reporting by Alissa de Carbonnel; Editing by Francesco
Guarascio/Jeremy Gaunt)
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