Latest news with #StabilityandGrowthPact
Yahoo
4 days ago
- Business
- Yahoo
European Commission gives fiscal verdicts for member states, with defence looming large
The European Commission delivered its Spring Package on Wednesday, an economic update that feeds into its five-year plan to boost the EU's resilience and includes country-specific recommendations. While fiscal responsibility remains important, the Commission underlined a need to boost defence capabilities. This comes not only in the wake of Russia's invasion of Ukraine, but also increased hostility from Washington. US President Donald Trump has continually warned Europe that it needs to increase financial contributions to guarantee its own security. 'Amid rising security challenges, the national escape clause (NEC) under the Stability and Growth Pact is also drawn upon for the first time,' said the Commission. The NEC allows member states to temporarily exceed maximum growth rates of net expenditure to boost defence financing. A total of 16 countries asked the Commission to implement this mechanism, specifically: Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia. Related MEPs oppose Commission's overhaul of EU budget after 2027 'Choices need to be made': EU Commission to propose simpler, more focused long-term budget Wednesday's Package also outlined country-specific recommendations to ensure that EU members are on track to boost their economic standing. 'Member States are encouraged to boost their competitiveness by closing the innovation gap, advancing decarbonisation in line with the Clean Industrial Deal, reducing excessive dependencies, increasing security and resilience, including by building up defence capabilities and promoting skills and quality jobs while ensuring social fairness,' said the Commission. While 12 member states are considered to be 'compliant' in terms of medium-term spending plans, the Commission flagged Cyprus, Ireland, Luxembourg and the Netherlands as countries that could overshoot fiscal limits. Portugal and Spain were considered to be 'broadly compliant'. The Commission noted that Austria, on the other hand, will face a formal procedure to bring its deficit back under control. Romania was another member state rebuked in the report. 'Romania's net expenditure growth is significantly above the ceiling set by its corrective path, posing clear risks to correcting its excessive deficit by 2030,' said the Commission. 'The Commission is therefore recommending that the Council adopt a decision that establishes Romania has not taken effective action.'
Euronews
4 days ago
- Automotive
- Euronews
European Commission gives fiscal verdicts for member states
The European Commission delivered its Spring Package on Wednesday, an economic update that feeds into its five-year plan to boost the EU's resilience and includes country-specific recommendations. While fiscal responsibility remains important, the Commission underlined a need to boost defence capabilities. This comes not only in the wake of Russia's invasion of Ukraine, but also increased hostility from Washington. US President Donald Trump has continually warned Europe that it needs to increase financial contributions to guarantee its own security. 'Amid rising security challenges, the national escape clause (NEC) under the Stability and Growth Pact is also drawn upon for the first time,' said the Commission. The NEC allows member states to temporarily exceed maximum growth rates of net expenditure to boost defence financing. A total of 16 countries asked the Commission to implement this mechanism, specifically: Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia. Wednesday's Package also outlined country-specific recommendations to ensure that EU members are on track to boost their economic standing. 'Member States are encouraged to boost their competitiveness by closing the innovation gap, advancing decarbonisation in line with the Clean Industrial Deal, reducing excessive dependencies, increasing security and resilience, including by building up defence capabilities and promoting skills and quality jobs while ensuring social fairness,' said the Commission. While 12 member states are considered to be 'compliant' in terms of medium-term spending plans, the Commission flagged Cyprus, Ireland, Luxembourg and the Netherlands as countries that could overshoot fiscal limits. Portugal and Spain were considered to be 'broadly compliant'. The Commission noted that Austria, on the other hand, will face a formal procedure to bring its deficit back under control. Romania was another member state rebuked in the report. 'Romania's net expenditure growth is significantly above the ceiling set by its corrective path, posing clear risks to correcting its excessive deficit by 2030,' said the Commission. 'The Commission is therefore recommending that the Council adopt a decision that establishes Romania has not taken effective action.' Volvo Cars announced worldwide sales of 59,822 cars in May, which was a decrease of 12% compared with the same month in 2024. This was partly due to the company struggling with recently imposed US automotive tariffs. Electrified models — both plug-in hybrids and fully electric vehicles — made up 44% of all car sales in May. This was a fall from 66% in May 2024. While fully electric models made up 21% of all May sales, plug-in hybrid models accounted for 23%. The best-selling model in May was the XC60, which sold 19,408 units — a slight dip from the 20,507 units sold in the same month last year. The XC40/EX40 model took second place, with 14,892 units sold — an increase on May 2024's 13,640 units. The third best-selling model was the XC90 with 8,794 units sold in May 2025. By contrast, 9,072 units of this model were sold in May 2024. As of December 2024, Volvo Cars had about 42,600 full-time employees, with its head office based in Gothenburg, Sweden, and production plants across the US, Belgium and in China. Volvo Cars also recently announced that it would be slashing 3,000 jobs, as part of wide-ranging cost-cutting measures, which are expected to save the company about SEK 18 billion (€1.6bn). These layoffs will primarily affect office-based positions in Sweden, which make up around 15% of Volvo Cars' white collar workforce. Out of these 3,000 layoffs, around 1,000 will be consultant positions. Earlier in May, the company laid off 5% of its staff in its Ridgeland, South Carolina facility, which accounted for 125 roles. Volvo Cars said in a press release about the redundancies on its website: 'These structural changes are necessary for Volvo Cars to deliver on its long-term strategy, strengthening its foundations for profitable growth. 'Volvo Cars remains firm on its ambition of becoming a fully electric car company, as fully electric is the fastest growing market segment and Volvo Cars is a leader in this transition.' Back in 2021, the company revealed that all its models would be electric by the end of the decade. However, it has pushed back this goal, citing rising uncertainties due to electric vehicle (EV) tariffs in many markets. Apart from tariffs, slower European sales and the higher cost of materials have also affected several major car companies in Europe. Nissan, Ford, General Motors, Volkswagen, Tesla and Stellantis have all announced layoffs in the last few months, as car companies scramble to become more efficient and adaptive in the current uncertain economic environment.
Reuters
28-04-2025
- Business
- Reuters
Germany asks for EU leeway on defence spending, letter shows
BERLIN, April 28 (Reuters) - Germany has asked the European Commission for an exemption from European Union borrowing limits in order to increase defence spending in the coming years, according to a letter from German Finance Minister Joerg Kukies seen by Reuters on Monday. Kukies told Reuters in an interview on Friday that Germany was likely to request the exemption. The European Commission has proposed allowing member states to raise defence spending by 1.5% of gross domestic product (GDP) each year for four years without any disciplinary steps that would normally kick in once a deficit is above 3% of GDP. "We see the Commission's proposal for a coordinated activation of the National Escape Clause of the Stability and Growth Pact as an important complementary measure to enable increased national defence spending while safeguarding fiscal sustainability," Kukies said in the letter. The Commission had hoped the proposal would be widely taken up by the 27 EU countries and help boost EU defence investment by 650 billion euros over the next four years to deter potential Russian aggression. However, only Portugal and Poland had so far signalled interest in the exemption. EU countries with high national debt are sceptical of borrowing more to spend on defence. Germany's request may encourage other countries to follow the path, although its government debt ratio of 62.5% of GDP in 2024 is much lower than that of Italy, France and Spain, which are all above 100% and reluctant to apply for the exemption.
The Star
22-04-2025
- Business
- The Star
Finland's public finances deteriorated in 2024, breaching EU thresholds
HELSINKI, April 22 (XINHUA) -- Finland's general government finances deteriorated in 2024, breaching European Union (EU) limits on deficit and debt, Statistics Finland said in a press release published on Tuesday. According to preliminary data, Finland's general government deficit stood at 4.4 percent of gross domestic product (GDP) in 2024, while debt under the excessive deficit procedure (EDP) reached 82.1 percent of GDP by the end of 2024. Both figures exceeded the EU thresholds of three percent for deficits and 60 percent for debt, as set out in the bloc's Stability and Growth Pact. The general government deficit - or net borrowing - amounted to 12.2 billion euros (13.05 billion U.S. dollars) in 2024, marking a year-on-year deterioration of 4 billion euros. Most of the debt increase stemmed from the central government, which added 14 billion euros in new debt, while local government debt grew by 1.8 billion euros. To balance the public finances, the current government, led by Prime Minister Petteri Orpo, has introduced spending cuts and tax rises since taking office in June 2023. The government has pledged to save approximately 9 billion euros with fiscal consolidation measures during its term. So far, the consolidation measures have included cuts to healthcare and education budgets and increasing the standard value-added tax rate to 25.5 percent from 24 percent. (1 euro = 1.07 U.S. dollars)
Reuters
28-03-2025
- Business
- Reuters
EU defence fiscal holiday will backfire
BERLIN, March 28 (Reuters Breakingviews) - Ursula von der Leyen is using the wrong tool with the right intention. The European Commission president wants to suspend the Union's fiscal rules to allow member states to accelerate their defence ramp up. Yet the measure she suggests may only increase the risk of a crash. With the rising Russian threat and growing signs that the U.S. is cooling on its 80-year commitment to defend the continent, Europe needs to spend an extra 1% to 1.5% of GDP on its defence every year. It won't be able to find the 200 billion euros to 300 billion euros it needs if governments prepare for war while trying to limit their budget deficits to 3% of GDP and public debts at 60% of output. The problem is von der Leyen's method. She is proposing activating the EU treaties' so-called national escape clause, conceived for country-specific emergencies, for four years. But the legal consequence is that it would for all practical matters 'unplug' the fiscal surveillance regime altogether, notes Lucas Guttenberg, an economist and senior advisor at the Bertelsmann Foundation in Berlin. Brussels insists that the flexibility would only apply to defence, but it is on shaky legal grounds: triggering the escape clause also means the Commission will no longer be allowed to track the evolution of public spending in other areas. In other words, the rules will no longer apply, whatever the category of public spending. Fast forward to 2029, and the problem is obvious. If it only relies on borrowing to finance its defence push, the EU would add 4% to 6% of GDP to its overall debt load, which would then approach 90% of output. That is not an unsustainable level. But large countries already struggling with heavy debt loads - France already at 114% of GDP, Italy at 136% in 2024 - would face serious market headwinds. And with fiscal surveillance out the window, the impact on government debt levels is likely to be bigger than just the increase in military spending. The increase in defence spending will be permanent, and not limited to the four years of the EU's offered exemption. The Commission will then be put in a difficult position. It could insist on fresh austerity to bring debt under control. Or, it will struggle to make member states abide again by its rules, making a mockery of the fiscal regime that was only recently revamped after Covid-19. A better approach would be to seize the opportunity to reform the system, while exempting defence investment - and only defence investment. It would give the EU predictable guidelines and bond markets more visibility. For now, the EU is facing the risk of four years without fiscal rules followed by a hard financial landing once the party is over. Follow @pierrebri, opens new tab on X CONTEXT NEWS EU leaders said after a summit on March 6 that they 'welcomed' a proposal by the European Commission to activate the national escape clause under their Stability and Growth Pact, which would exempt security and defence spending from rules limiting budget deficits to 3% of GDP and gross public debts to 60% of GDP. Under the Commission's proposals, EU member states would not be subjected to the so-called excessive deficit procedure for having increased their military spending, for a period of four years.
