The European Commission will next week (27 February) adopt a decision on whether France, Italy and Belgium are complying with eurozone budget rules. The decision is politically charged because if the Commission finds that the three countries do not comply, they could face fines, in particular in the case of France.

The conclusions on eurozone members’ draft 2015 budgets were originally scheduled for November last year. But while the new Commission of incoming president Jean-Claude Juncker warned that the three countries were on track for a “significant deviation” from eurozone rules, it said that it needed more time to assess their budget plans fully.

The Commission at the time predicted that France’s draft 2015 budget would lead to a deficit of 4.3% of gross domestic product (GDP), way over the 3% limit set down in the eurozone’s rules, which France’s current president François Hollande had promised to meet by 2015.

In contrast to France, both Belgium and Italy were planning to remain within the 3% cap, but were not planning to reduce spending in line with targets agreed with the Eurogroup of eurozone finance ministers.

Rules introduced in 2012 in the wake of the eurozone’s sovereign debt crisis gave the Commission new powers to monitor draft national budgets for compliance with eurozone rules. These cap public deficits at 3% and overall public debt at 60% of GDP.

Many member states within the Eurogroup are frustrated with France’s failure to fall into line. Centre-right and liberal MEPs strongly criticised the Commission’s postponement of its decision on France. “France has [run an excessive deficit] since 2009. Do you really think it is a question of more time?” Sylvie Goulard, a French liberal MEP, asked Pierre Moscovici, the European commissioner for economic and financial affairs. She warned that the Commission was undermining the credibility of eurozone rules.

Nevertheless, the Commission in January “clarified” in a communication how it plans to apply the budget rules from now on. Thus the Commission will discount certain public investments from its budget figures – a key demand of the Italian government – and will allow member states longer to balance their budgets, provided they are implementing structural reforms in line with Commission recommendations.

Hollande is hoping that a round of business reforms currently before the French parliament will meet those criteria, although they are strongly opposed by many of his own MPs.

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