Both Italy and France have backed off from a budget clash with the EU.
Rome and Paris say they’ll now make further savings, sparing both governments an embarrassing scrap with the European Commission.
The EU executive has new powers to police the budgets of eurozone countries.
One Brussels-based expert explains EU member states granted it these powers last year.
“These are not rules which are dictated by the Commission, these are the rules that the members of the eurozone have agreed together,” said Fabian Zuleeg of the European Policy Centre.
“They have agreed together to reinforce the system. So it is now up to the countries to deliver. France has more room to manoeuvre, but France also politically has to do more. There has to be a clear commitment to further reforms.”
France on Monday announced new savings of 3.6 billion euros.
Italy is softening its stance as well. The country’s finance minister Pier Carlo Padoan has unveiled fresh measures that will save 4.5 billion euros.
All this is bring its budget deficit down to a binding EU target of three percent of GDP.
“The worst possible outcome would be if we get a situation which cannot be resolved where countries ignore the rules which are there. This is something we cannot afford,” said EPC’s Zuleeg.
The European Commission has not yet ruled on France and Italy.
It is set to meet on Wednesday to discuss both countries’ budget situation.