Who really breaks the euro area’s rules?

Why we weight

Germany and Malta do not weigh the same.

The usual answer is that “most countries follow the rules”. Counted by number of countries, that is partly true. But Germany is 28.4% of the euro area economy and Malta 0.2% — about 140 times smaller. So we weighted the data by each country’s economic size. The picture turned out to be entirely different.

The criteria

The test the big countries would fail.

The criteria for joining the euro area are four quantitative and two qualitative. For 2025 the thresholds are:

• Inflation up to 2.6% — the average of the three EU countries with the lowest inflation plus 1.5 percentage points.
• Budget deficit up to 3% of GDP.
• Government debt up to 60% of GDP, or falling fast enough.
• Long-term interest rates up to 5.3% — the average of the same three countries plus 2 percentage points.

On top of these come two years in the Exchange Rate Mechanism II and legal compatibility. Here is how the euro area’s members would do today if they had to apply again. Countries are sorted by economic weight.

✓ met · ✗ not met · ! debt is above 60% but falling fast enough. In the deficit column, “+” means a budget surplus. Reference values are calculated using the Treaty methodology for calendar year 2025; the official ECB and Commission figures may differ by a few tenths.

Number of countries versus economic weight

The GDP share shows what part of the euro area economy belongs to the countries that meet each criterion.

To put it plainly: the debt criterion is met by almost half the countries, but they make up only 14.4% of the economy. Germany, France, Italy and Spain together account for 71.8% of GDP and 78.3% of the euro area’s debt. Not one of them meets all four criteria. France, Italy and Spain meet only two.

To be fair, we should also note the opposite case: on inflation the big countries do better, because France and Italy had some of the lowest rates in the EU in 2025.

The uncomfortable part

One set of rules, two standards.

When the big countries break the rules, the rules change. When the small ones have a problem, the terms are far harsher.

• 1997 — France books a one-off payment from France Télécom (FRF 37.5 billion, about 0.5% of GDP) to get below 3% in exactly the year by which its entry is judged.
• 2001 — Greece hides €2.8 billion of debt through a currency swap structured by Goldman Sachs. Eurostat’s 2004 revision shows that its deficits had been systematically understated.
• 2003 — Germany and France breach the limit. The Council of finance ministers (ECOFIN) decides not to apply the procedure against them. In 2004 the EU Court of Justice annuls that decision (case C-27/04).
• 2005 — The Stability and Growth Pact is relaxed, mainly at the insistence of Germany and France.
• 2012 — Hungary receives a decision suspending €495 million from the Cohesion Fund over its deficit. It is lifted three months later.
• 2015 — Spain is fined €18.93 million — not for its deficit, but for falsified statistics in the region of Valencia.
• 2016 — France is given yet another extension. The then President of the European Commission, Jean-Claude Juncker, explains why with the words “Parce que c’est la France” (“Because it is France”).

There is one more aspect. Germany, France, Italy and Spain together hold 57.7% of the EU’s population. In qualified-majority votes in the Council, these four countries can form a blocking minority on their own (at least 4 countries representing more than 35% of the population).

Conclusion

The rules are kept by the small and broken by the big.

Count countries, and most seem to follow the rules. Weight the economies, and the result is the opposite. That is true not only today but for almost the whole history of the euro area. The new members, including the Baltic states and Croatia, are more disciplined than the founders. The big countries do not merely break the rules — they manage to change them when the rules get in their way.