Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Top Stories

French tightening plans credible, Dutch want to spend too much, says Commission
2024-11-26T162741Z_2_LYNXNPEKAP0MG_RTROPTP_4_USA-TRADE-EU-TRUMP

Published : , on

By Jan Strupczewski

BRUSSELS (Reuters) -France’s draft 2025 budget and medium-term plan to bring down public debt are in line with EU rules and credible, while spending plans of the normally frugal Netherlands are too high, the European Commission said on Tuesday.

In an assessment of draft budgets of euro zone countries and their four- to seven-year plans to cut public debt, the Commission said that the overall euro zone fiscal stance would be 0.29% of GDP tighter in 2025 than in 2024, which was good.

The tighter fiscal stance chimes with a warning from the European Central Bank last week that despite easing debt ratios, some euro countries were still fiscally weak, which could trigger “market concerns over sovereign debt sustainability.

France’s bloated public finances have been under particular scrutiny from markets since a June snap election produced a hung parliament and a minority government led by Michel Barnier that will have to push through an austerity budget for 2025.

France is set to have a budget gap of 6.1% of GDP this year and the French draft budget for 2025 aims to cut it to 4% and then bring the gap down to below the EU limit of 3% in 2029.

But Barnier will have a tough time steering this through parliament and, if he fails, it could mean the end of his government and the consolidation plans presented.

Reflecting that growing risk, the premium investors demand to hold French bonds over German ones flirted with highs not seen in more than 12 years.

NETHERLANDS SEEN SPENDING TOO MUCH

The Commission said that the fiscal plans of 20 countries – Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Ireland, Greece, Italy, Latvia, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden – met EU requirements and “set out a credible fiscal path to ensure fiscal sustainability over the medium term.

The Netherlands, which has a reputation as a fiscal hawk in Europe, was the only country that the Commission said did not respect the new EU fiscal rules.

It said the Dutch government wanted to increase spending by 4.2% on average every year until 2028, while the Commission had asked it to raise spending by only 3.2%.

“The Netherlands is assessed to be not in line with the recommendation, as the net expenditure (both in annual and in cumulative terms) is projected to be above the ceilings,” it said of Dutch plans for 2025 and cumulatively for 2024-2025.

Under the EU’s new fiscal rules, which came into force in April, the Commission and each country agree on a four- to seven-year plan for net expenditure that would bring down debt in a sustainable way and reduce the budget deficit below 3% of GDP. In case of a disagreement on how much a government can raise spending, it is the Commission’s proposal that is adopted as a rule.

WORRIES ABOUT EUROPE’S ECONOMY

Adding to market worries about France’s ability to repay its debts are concerns over European growth prospects because of the lack of a stable government in Germany, which faces a snap election in February.

More worries come from the prospect of U.S. President-elect Donald Trump imposing tariffs on EU goods and from the EU’s trade tensions with China.

“It’s a big mess,” said ING’s global head of macro Carsten Brzeski. “The concern is not that this could lead to a severe recession, but rather it will further contribute to this undermining of economic prosperity in Europe,” adding he was concerned politicians and policymakers would react too late.

The Commission said, however, that despite the tighter fiscal stance EU public investment would grow due to the EU’s recovery fund spending.

“For the euro area as a whole, public investment will increase from 3.4% in 2024 to 3.5% in 2025. We are avoiding one of the mistakes of the previous decade, when the brunt of fiscal consolidation fell on investment and growth suffered as a result” European Economic Commissioner Paolo Gentiloni said.

(Additional reporting by Yoruk Bahceli in London; Reporting by Jan Strupczewski; editing by Philip Blenkinsop and Alex Richardson)

 

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post