The European Central Bank (ECB) has called on Thursday to the countries of the euro zone to continue applying fiscal adjustments and fully comply with the requirements of the European Stability and Growth Pact. "It is essential that additional consolidation efforts be made, especially in countries with high debt levels," the eurobank maintains in an analysis of European public finances in the economic bulletin published on Thursday. In these moments Italy, France and, To a lesser extent, Spain is clearly deviating of the adjustment path required by Brussels.
In the opinion of the institution based in Frankfurt, it is very important that "the ratio of public debt is on a downward path, as the high indebtedness of these countries makes them vulnerable to future recessions or new episodes of instability in financial markets" .
In its study of the evolution of European public accounts, the central bank concludes that the budget deficit of the euro area as a whole will be reduced in 2018 due to higher public revenues, cyclical conditions and a decrease in interest payments. However, he believes that there will be a deterioration of the accounts for the next two years. He believes that the decline in debt will slow down compared to what he predicted only three months ago. And in this sense it detects quite significant differences between countries. In particular, it points out "the pro-cyclical relaxation of fiscal policy in vulnerable countries". And he insists: "Countries with high levels of debt would benefit from additional consolidation efforts."
"The fact that the lower degree of compliance with the Stability and Growth Pact corresponds to the countries most vulnerable to disturbances is a cause for concern," the bulletin points out. And he adds that these countries are the most likely to fail to comply again in 2019. The bulletin includes a summary of the conclusions of the European Commission regarding the budgets of the member countries, and it highlights that five States among which is Spain present a risk of default.
The ECB puts the emphasis above all in Italy, whose government has posed a challenge to the European institutions by planning a fiscal expansion: "It is particularly worrying that Italy, which has a very high public debt ratio, has the greatest deviation from the current commitments". In fact, the eurobank, chaired by the Italian Mario Draghi, highlights that part of the worsening of fiscal prospects can be attributed to the public accounts of the transalpine.