Outgoing Commission relents on Italian and French budgets

by N. Peter Kramer

But these adjustments, nor from France neither from Italy, bridge the deficit gaps that had risked the Commission’s rejecting of the budgets. The French and Italians only announced to make budget cuts in the future without exact figures and effects of it, but ... the Commission believes them and gave approval. The outgoing commissioner for monetary affairs, the Fin Katainen, said in a statement that “I want to welcome the fact that these member states have responded constructively to our concerns”. He added that he couldn’t “immediately identify” serious shortcomings in the revised budget proposals. May be good Katainen has already his promotion in the pocket; he will be one of the 7 super-commissioners in the new Juncker Commission.

France and Italy, Eurozone’s second- and third-largest economies after Germany, favour a stimulus of their economies rather than focus on rigid budget cuts. Interesting is how the softening of the Commission’s position will be received in Berlin. Germany has declined to back down from its insistence that the budgetrules must be enforced and continue asking to respect the Stability and Growth Pact, which stipulates that memberstates must hold their budget deficits to no more than 3 percent of GDP.

The further control of the Italian and French budgets is hand over now to the new Commission, in particular to the new commissioner for economic and monetary affairs, Pierre Moscovici. Vice-President Valdis Dombrovskis, a former Latvian Prime-Minister, has to supervise him, in Juncker’s new method. The question is however, will a heavyweight as Moscovici, until April finance minister of France, listen to the Latvian. Same applies to commissioners from other big countries as UK, Spain and Germany. Will they lend a willing ear to vice-presidents from countries as Estonia, Slovakia and Finland?