Portugal’s budget situation has improved so much that the European Commission says it is no longer breaking EU rules.
Six years after it had to be bailed out, Lisbon’s budget deficit for 2016 was two percent, well below the EU limit of three percent of gross domestic product.
Economic Affairs Commissioner Pierre Moscovici called it very good and very important news for Portugal: “Based on the available information at this stage, and reassurances that we received from the Portuguese government, we do not expect to put at risk the durable reduction of the deficit. So it’s a very clear and unanimous decision of the Commission and we clearly share the same point of view”.
A disciplinary budget procedure against non-eurozone member Croatia was also ended.
The 19-country eurozone has lowered its total budget deficit to 1.5 percent of the bloc’s GDP in 2016. The gap is due to fall further this year and next.
But Moscovici said around the EU the economic recovery and improvements in budget positions were “uneven”.
Three eurozone members – France, Spain, and Greece – are not meeting the deficit limits set by the EU’s stability and growth pact rules, along with Britain which does not use the euro.
In France the gap is set to go down below three percent this year but is forecast to rise above the threshold in 2018, contrary to EU recommendations, unless the government appointed by French President Emmanuel Macron approves successful new economic reforms in coming months.
The Commission also said Italy still faces “urgent challenges” due to its very high level of public debt,which is the single currency bloc’s second biggest after Greece.
Brussels considered additional budget measures adopted by Rome in April as sufficient to keep Italy’s accounts in line with EU rules for this year.