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Has Germany really violated the Stability Pact 18 times, as Juncker claims?

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Pagella Politica, Italy

21 May 2019, Updated: 21 May 2019

Has Germany really violated the Stability Pact 18 times, as Juncker claims?

European Commission president Jean-Claude Juncker claimed that Germany has violated the Stability Pact 18 times. We verified the accuracy of the claim.

European Commission president Jean-Claude Juncker, in an interview with German business daily Handelsblatt on May 2, claimed that “the Germans love to complain about Italy. But they themselves have violated the Stability Pact 18 times”.

The claim is accurate. Let’s take a look at what exactly Juncker is referring to, and the data on which he’s relying.

The Stability Pact

“The Stability and Growth Pact”, the Commission’s website reads, “is a set of rules designed to ensure that countries in the European Union pursue sound public finances and coordinate their fiscal policies”.

It was born in 1997, and over the next two years its Preventive and Corrective Arms were created, giving European institutions the power to monitor member states’ compliance with the economic criteria established by the treaties, and take action against any violations.

Over the following years the Pact was modified several times, particularly after the economic crisis from 2011 to 2013. New regulations – and new, more stringent criteria, which we’ve already discussed – were introduced with the “six pack”, the “two pack”, and finally in the “Fiscal Compact”.

To which violations is Juncker referring?

To be certain of correctly interpreting Juncker’s claim, we asked the European Commission for clarification. A spokesperson explained that the president was referring to violations of the two criteria for deficit to GDP ratio – which should be below 3% – and debt to GDP ratio – which should be below 60% – which occurred between 1999 and 2018.

The data

After consulting the Eurostat database, this is what we found. Regarding the deficit to GDP ratio, Germany exceeded the 3% threshold on seven occasions: in 2001 (3.1%), in 2002 (3.9%), in 2003 (4.2%), in 2004 (3.7%), in 2005 (3.4%), in 2009 (3.2%) and in 2010 (4.2%). Regarding the debt to GDP ratio, Germany constantly exceeded the threshold between 2003 and 2018, inclusive. Thus, sixteen times.

In particular, the debt to GDP ratio increased significantly between 2007 and 2010, when it rose from 63.1% to 81.8%, and remained close to 80% until 2013, when it began its rapid descent towards 2018’s 60.9%.

The total is therefore 23 violations over the last 20 years, even more than Juncker claims.

We asked the Commission for further clarification, and they explained that the violations of the Pact were counted only once for each year, regardless of which criteria was (or were) violated. Thus, following this method of calculation, the number of violations is indeed 18, as claimed by Juncker.

And Italy?

Italy, over the same period, violated these two criteria 28 times: the country’s debt to GDP ratio exceeded the threshold twenty times out of twenty - and to a clearly greater extent than Germany - while the deficit to GDP threshold was passed eight times (in 2001, 2003, 2004, 2005, 2006, 2009, 2010 and 2011).

Following the aforementioned criteria for calculation, the total number of violations reaches “only” 20: just two more than Germany.

Conclusion

Juncker, following the criteria for calculation mentioned by the European Commission itself, makes a correct claim. Germany, from 1999 to 2018, has indeed violated the Stability Pact – specifically the two criteria on deficit to GDP ratio and debt to GDP ratio – 18 times out of twenty.

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