What happens when a eurozone country breaks EU fiscal rules that limit the allowable deficit to 3% of GDP?
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Nothing happens immediately. Fines can be given for members that have exceeded the 3% limit and not implemented sufficient corrective measures. This can take years. So excessive deficit procedures have been opened many times but most countries (if not all) applied sufficient measures to recover from the excess. Today only Cyprus is above the 3% limit.– armatitaMay 2, 2019 at 13:21
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2 Answers
Empirically: nothing.
Most states have at one time or another broken the limit. France hasn't met the limit since 2007. There has not been a single measure taken by the EU.
The deficit "limit" of 60% is also merely theory, with the EU on average being at 90%. This is of course less realistic to enforce on short notice, but the EU does not even enforce the "60% or decreasing" rule.
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Is there some measure that the EU rules recommend be taken when in this case? Even if EU nations don't actually do it in practice? Dec 6, 2016 at 15:28
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@SamIam: The EU should be imposing sanctions/fines, according to its own rules.– MSaltersDec 11, 2016 at 19:38
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While this seems to be the correct answer, it might be helpful to indicate which EU body (bodies) has (have) the power to impose those fines.– JJJ ♦Apr 27, 2019 at 0:22
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1(-1) This answer is simply incorrect. The EU has a range of tools and as a matter of fact, it has opened a number of “Excessive deficit procedures” resulting in a number of reports, warnings and corrective measures.– RelaxedApr 29, 2019 at 20:40
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1Notice that the point of those rules is to help countries go back to sustainable levels of deficit, not punish them. No nation is fined for exceeding a 3% deficit , nations are fined for exceeding that value and do nothing about it (none or insufficient corrective measures). That being said, those measures must have worked since today only Cyprus exceeds the 3%, and the EU28 deficit almost halved in one year (0.6 for EU28, 0.5 for eurozone).– armatitaMay 2, 2019 at 13:06
Fun fact: There has not been a single member that complied with all the requirements of joining the EU when they joined. But as long as the countries attempt to make progress and are not problematic, the EU doesn't intervene.
