Maybe that´s the case of Mr. Olli Rehn (from Finland), the EU’s economic affairs commissioner, who said in a statement:
“The current situation can be summarised like this: we have disappointing hard data from the end of last year, some more encouraging soft data in the recent past and growing investor confidence in the future.”
Mr. Rehn is the ‘almighty referee’ who decides if a country has disrespected the deficit target rule or has experienced ‘bad luck’. France is up for review and the commission’s winter report states:
The commission’s 143-page winter economic forecast gives some signals Mr Rehn is preparing to give France a reprieve. It states that new tax measures are expected to bring in additional revenues amounting to 1.5 per cent of GDP and explicitly states that much of the missed target is due to the economic downturn.
“Reprieves” are the norm:
Although Spain has been already given a waiver, the new data reveal just how difficult the road ahead is for Madrid to hit even the new, more lenient targets. Spain was supposed to lower its deficit to 5.3 per cent of GDP last year, but instead came in with nearly double that: 10.2 per cent, by far the highest in the EU.
This year, Spain’s deficit is projected to hit 6.7 per cent, well off the 3 per cent goal it was supposed to achieve. Without any additional austerity measures, Madrid’s deficit it projected to balloon again to 7.2 per cent in 2014, the forecast predicts.
The deepening recession will hit particularly hard in countries that have required EU financial assistance, particularly Greece, Spain and Portugal, which are expected to suffer deeper recessions this year and barely return to growth next year, according to the new forecasts.
Things could not be different because monetary policy in the Eurozone is strongly contractionary, and there´s no way that ‘two contractions” – fiscal AND monetary – can make for an expansion! The chart illustrates.