In order for EMU to function smoothly, Member States must avoid excessive budgetary deficits. Under the provisions of the Stability and Growth Pact, they agree to respect two criteria: a deficit-to-GDP ratio of 3% and a debt-to-GDP ratio of 60%.
If a Member State exceeds the deficit ceiling, the excessive deficit procedure (EDP) is triggered at EU level. This entails several steps – including the possibility of sanctions – to encourage the Member State concerned to take measures to rectify the situation.
The EDP is established in the Treaty and specified in the Stability and Growth Pact legislation.
The EDP sets out criteria, schedules and deadlines for the Council to reach a decision on the existence of an excessive deficit. This decision is taken within a fixed time period after the deadlines - of 1 April and 1 October - for EU Member States to report their government finances to the Commission.
No EDP procedure will be launched if the excess of the government deficit over the 3% of GDP threshold is considered temporary and exceptional and the deficit remains close to the threshold.
When the Council decides that a deficit is excessive, it makes recommendations to the Member State concerned and establishes deadlines for effective corrective action to be taken.
The Council monitors implementation of its recommendations and abrogates the EDP decision when the excessive deficit is corrected.
If the Member State fails to comply, the Council can decide to move to the next step of the EDP, the ultimate possibility being to impose financial sanctions.
|Overview of ongoing excessive deficit procedures|
|Country||Date of the Commission report|
|Council Decision on existence of excessive deficit (Art.104.6/126.6)||Current deadline for correction|
|Denmark||12 May 2010||13 July 2010||
|Cyprus||12 May 2010||13 July 2010||
|Austria||7 October 2009||2 December 2009||
|Belgium||7 October 2009||2 December 2009||
|Czech Republic||7 October 2009||2 December 2009||
|Italy||7 October 2009||2 December 2009||
|The Netherlands||7 October 2009||2 December 2009||
|Portugal||7 October 2009||2 December 2009||
|Slovenia||7 October 2009||2 December 2009||
|Slovakia||7 October 2009||2 December 2009||
|Poland||13 May 2009||7 July 2009||
|Romania||13 May 2009||7 July 2009||
|Lithuania||13 May 2009||7 July 2009||
|France||18 February 2009||27 April 2009||
|Latvia||18 February 2009||7 July 2009||
|Ireland||18 February 2009||27 April 2009||
|Greece||18 February 2009||27 April 2009||
|Spain||18 February 2009||27 April 2009||
|UK||11 June 2008||8 July 2008||
|Hungary||12 May 2004||5 July 2004||
|All procedures (ongoing and closed) in detail by country|