The reaction by Finance Minister Edward Scicluna to the Commission’s censure as part of the Two-Pack process (see page 4 for the Commission’s appraisal and the minister’s reaction) is as predictable at it is misplaced.
But first, we have to put it in perspective. The context is that Malta is not alone on the benches of the guilty, though that’s poor consolation.
No country will have to resubmit budgets, but the commission said that in several cases it found reasons for substantial criticism.
"It is reassuring that no draft budgetary plan has been found in serious non-compliance with the obligations of the 'Stability and Growth Pact' and that it is not necessary to request revised budgetary plans,'' the Commission’s statement said.
Three of the eurozone's biggest economies came in for criticism with the Commission saying France's budget just about passed muster. Germany, the eurozone's biggest economy, was accused of not heeding Commission recommendations to correct its structural imbalances.
Italy, Finland, Spain, Luxembourg and Malta were among other countries at risk of breaking the rules.
At least five eurozone member states – Italy, Spain, Finland, Malta and Luxembourg – are on course to break European Union rules on acceptable levels of debt in 2014.
The Commission's conclusions did not include Greece, Cyprus, Ireland and Portugal, since these countries are subject to specific reform programmes having received rescue funds from international lenders.
Finland and Luxembourg's budgets are predicted to lead to deficits for 2014 of 1.9% and 0.4% of gross domestic product, thus far lower than those of Spain, Italy, France and several other eurozone countries.
But the Commission warned that both countries were likely to break EU rules and they were not doing enough to diminish total government debt. In particular, Finland's was predicted to breach EU rules limiting total government debt to 60% of GDP in 2014.
Belgium, Estonia, France, Italy, Malta, Slovenia and Slovakia had all made “little progress” in implementing structural reforms, such as transferring the tax burden away from labour and onto consumption, property and pollution.
Germany, in particular, had made “no progress” on its recommendations. Rehn called on a future German coalition government to open the country's service sector to competition, do more to ensure sustainable wage growth and encourage more women to work full time.
Primarily, Brussels has urged Italy and Spain to redraft their tax and spending plans or risk breaching eurozone debt rules in 2014.
The two countries were singled out for criticism in the first report issued as part of the so-called Two-Pack process, under which countries in the single currency area agreed to far closer scrutiny of their economic policies.
Brussels waded into a potential life-threatening budget fight for the Italian government, saying Rome’s 2014 spending plan would not cut Italy’s national debt fast enough and improperly includes billions of euros in new investment spending.
Italy and Spain are widely seen in financial markets as the most likely candidates to be forced to seek help from the European Central Bank's emergency bailout scheme, known as "outright monetary transactions" in the coming years. Both countries were invited by Brussels to "take the necessary measures within the national budgetary process" to prevent them busting the targets.
Echoing Prof. Scicluna, Italy's finance ministry protested after the commission's judgment: "In formulating its opinion, the commission does not take into account important measures announced by the government."
Croatia was also warned that it may face action under the Excessive Deficit Procedure for breaking deficit limits.
Enrico Letta, the Italian prime minister, declared victory over Brussels budget minders in May when the commission certified his country had proven it could keep its deficit below 3 per cent of economic output and released it from special monitoring.
But Italy has the second-highest debt level in the eurozone at a projected 133 per cent of economic output, behind only Greece. As part of its probationary period, Rome is required to show it can shrink that debt quickly – a commitment Brussels said its 2014 budget put it on a path to miss.
The disputes have isolated Fabrizio Saccomanni, a technocrat urged upon Mr Letta as finance minister by EU officials. The commission’s criticism could backfire and leave Mr Saccomanni further weakened, while Silvio Berlusconi’s centre-right party will find more ammunition to ride burgeoning anti-EU sentiment.
Mr Saccomanni insisted he would not strip the investment spending from the budget, saying it risked Italy’s already fragile economic recovery. Instead, he said there were already reforms in the pipeline, including a highly-touted spending review, which would cover any new cuts.
“In a number of cases, there is scope for significant improvements”, said Olli Rehn, the European commissioner for economic and monetary affairs. But Rehn is keenly aware of how sensitive member state governments and public opinion are to any perception that the Commission may be dictating national budgets. “This exercise is much more about partnership than punishment,” he said.