Oops, France did it again! EU allows Paris near-traditional budget breach for 2019

Brussels has warned France that it will not tolerate its off EU limits budget beyond 2019, while saying that President Emmanuel Macron has “lost authority” after his concessions to Yellow Vests protests.

Paris had to admit last week that its budget deficit next year is set to stand at around 3.2 percent, which is 0.4 percent more than initially expected and higher than the three percent that the European Union deficit rules allow.

The forecast comes following weeks of nationwide anti-fuel tax hikes and anti-Macron protests, that forced the French leader to announce wage increases for the poorest workers and a tax cut for most pensioners. However, those concessions cost the French budget a hefty sum.

EU Budget Commissioner Gunther Oettinger believes that Macron had “lost authority” by releasing such a budget draft, although remaining “a strong supporter” of the bloc.

“Under this condition, we will tolerate a national budget deficit higher than three percent as a one-time exception. However, it must not continue beyond 2019,” Oettinger told Funke media group in an interview, as cited by Reuters. He added that the French government should better go on with its reform agenda, especially in the labor market.

However, the 2019 exemption for France is not the first one. Last year was the first time in a decade when Paris matched the EU’s three percent limit. Although the European Commission has the power to impose fines and other penalties for non-compliance with the rules, France was not penalized for the breaches. Notably, France is not the only European powerhouse to escape the non-compliance sanctions, as the same happened with Germany back in 2003.

However, some other EU members seem to be excluded from Brussels’ leniency. In November, the EU Commission proposed to put Italy under an economic disciplinary program over a serious breach of EU rules. Rome was let off the EU penalties hook only after a budget deal with Brussels was reached in mid-December. Despite this, the bloc still says that the country is far from solving its economic problems.

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