Back in the early 2000s, Italy, Portugal, and Greece were being chastised and threatened with fines by the European Commission for breaking the Stability and Growth Pact, which aimed to limit the fiscal deficit of member states’ budget to 3% of GDP. Then something happened around 2001 which caused the French and Germans to blow their budgets and go on a borrowing spree, and all of a sudden the Stability and Growth Pact didn’t matter (see this chart for historical deficits). It became quite obvious that EU rules are only to be enforced against certain countries, and exceptions made when it came to France and Germany; those less charitable thought it quite obvious that the EU was run for the primary benefit of those two member states.
Fast forward 17 years and we had the European Commission refusing to approve Italy’s budget because it breaks the Stability and Growth Pact. Then a short time later French president Emmanuel Macron, with his back to the wall facing the might of the gilets jaunes, decided to throw an €8bn – €10bn bung at them in the hope of saving his presidency. France’s budget was already perilously close to the 3% limit, and this pushed it over the edge. So the European Commission is going to take action, right?
The EU will accept a French budget deficit above the EU’s 3 percent ceiling in 2018 “as a one-time exception,” Budget Commissioner Günther Oettinger said in an interview published Thursday.
Now there’s a surprise, eh? If you follow the link and translate from the German, you find out why:
President Macron has lost authority with his budget for 2019, which exceeds the deficit limit of three percent. But he remains a strong supporter of the European Union.
Of course. The rules don’t matter provided you are France or Germany and you are a strong supporter of the EU. What a wonderful club. I can’t think why Britain voted to leave.