Among those already examined France, Germany, Greece, the Netherlands, Portugal and Spain. They are now added Czech Republicthe three baltic states, HungaryAnd the Luxembourg And the Slovakia.
Italy, concerns remain about the debt/GDP ratio – “In Italy, the concerns about the high public debt / GDP ratio remain unchanged,” the EU Commission emphasizes. Indebtedness remains “high”, and although it has declined to 150.3% of GDP in 2021, “it is expected to remain well above its level for 2019”. The deficit fell to 7.2% in 2012, “and is expected to continue to narrow. But spreads have deviated ‘significantly’ from the eurozone average through increased borrowing costs.” The risks to financial sustainability are high in the medium term.”
Italy is subject to debt financing terms In the medium term, Italy, along with eight other member states, could face “increased risks to fiscal sustainability”. According to the European Commission, countries with the highest debt ratios are particularly vulnerable to changes in financing terms. In the scenario of a one percentage point increase in the difference between growth and interest rates, “debt will increase by more than 10 percentage points of GDP by 2023 in Italy, Greece, Spain and Portugal.”
In the euro area, there is a risk of more expansionary policies than expected Furthermore, for most eurozone countries, there is a risk that the fiscal position could turn out to be more expansionary than currently envisioned. Therefore, the uncertainty related to the trend in energy prices and the lack of information about the possible extension of energy measures until 2023 has a significant impact. The Commission notes this in the autumn package that opens the European semester, in particular among the conclusions regarding the assessment of the submission of budget planning documents. Among the high-debt countries, Brussels believes that the fiscal plans of France, Greece and Spain are in line with the fiscal guidance in the Council’s recommendations. Belgium’s draft budget is partially in line, while Portugal’s plan is likely to be partially in line with the recommendation. “The growth of Belgium’s nationally funded primary current expenditure should not be less than the growth of potential output over the medium term,” the note continues.
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