Bussels - Italy and Spain are among five eurozone countries at risk of breaching the European Union's debt and deficit rules next year, the bloc's executive warned Friday, after conducting its first-ever assessment of national draft budgets.
Italy, the eurozone's third-largest economy, was told that, because of its high debt, it cannot benefit from a highly anticipated exemption that would have allowed growth-friendly investments, even if these temporarily push a country over its deficit targets.
Slovakia received the same news.
Malta, Luxembourg and Finland also risked breaching EU rules, the European Commission warned, while Germany and Estonia were the only two countries on track to fully comply with the bloc's debt and deficit targets.
The EU's budgetary surveillance exercise is a new step towards spotting budget problems early on, in an aim to boost growth as the bloc emerges from prolonged recession.
“Today we reach a milestone in the implementation of Europe's strengthened economic governance,” said EU Economy Commissioner Olli Rehn.
“In an economic and monetary union, national budgetary decisions can have an impact well beyond national borders.”
Germany received a ticking-off for not having made progress on structural reforms that it was advised to undertake earlier this year. These include measures to stimulate domestic demand.
Non euro-member Poland was told that it failed to take effective steps to meet deficit targets this year, and that the measures proposed to meet 2014 targets were not sustainable.
The commission said EU member states should give Poland an extra year to correct its deficit.
The commission also recommended opening a so-called excessive deficit procedure against Croatia, which joined the EU in July, after finding that it was not meeting EU targets. - Sapa-dpa