France, Italy and five other EU countries were placed in formal proceedings on Friday for breaching the bloc’s budget rules, which could lead to unprecedented fines if corrective action is not taken.

“Today, the Council adopted decisions establishing the existence of excessive deficits for Belgium, France, Italy, Hungary, Malta, Poland and Slovakia,” the body representing the 27 member states said.

This procedure is known as an ‘excessive deficit procedure’ and starts a process in which a country must negotiate with Brussels a plan to bring its national debt or deficit back on track.

The seven countries ran deficits – the difference between government revenue and expenditure – of more than 3 percent of gross domestic product, in violation of the bloc’s budget rules.

France’s deficit stood at 5.5 percent in 2023, but it looks set to be difficult to reduce due to political uncertainty following snap elections, which were won by a left-wing coalition demanding much higher government spending.

The EU countries with the highest deficit-to-GDP ratios last year were Italy (7.4 percent), Hungary (6.7 percent), Romania (6.6 percent) and Poland (5.1 percent).

The council also said that Romania had not taken “effective action” against its excessive deficit despite a procedure being opened against the country in 2020 and that the country would therefore be closely monitored.

As a next step, countries must submit medium-term plans by September on how they will remedy the breach.

The European Commission will then present an evaluation of the plans in November, detailing the path forward to restore the budget to health.

This is the first time Brussels has reprimanded EU member states since the bloc suspended rules following the 2020 coronavirus pandemic and the energy crisis sparked by Russia’s war on Ukraine, while states propped up businesses and households with public money.

The EU spent two years under suspension working on reforms to budget rules to create more room for investment in key sectors such as defence.

But two sacred objectives remain: the government debt must not exceed 60 percent of national production, and the government deficit must not exceed three percent.

Countries that fail to address the situation could theoretically be fined 0.1 percent of gross domestic product (GDP) per year until action is taken to address the violation.

In practice, however, the commission has never imposed fines, fearing that this would have unintended political consequences and damage a state’s economy.