EC Launches Legal Action Over Deficits

by Ulrika Lomas, for LawAndTax-News.com, Brussels

15 January 2004

The European Commission on Tuesday launched legal action against the EU's Council of Ministers, over their decision to disregard its recommendation with regard to France and Germany's spiralling budget deficits.

The Commission had recommended that the two eurozone founding members, who helped to create the Stability and Growth Pact, should be fined for breaking the terms of the Pact by allowing their budget deficits to breach the 3% of GDP limit.

However, the Council of Ministers brushed this suggestion aside, voting instead to give the two countries a year's grace. This means that France and Germany will also be permitted deficits higher than the 3% limit stipulated by the Stability and Growth Pact in 2004.

Speaking to the UK media, an EC spokesman explained that the Commissioners have launched the legal action in order to seek clarification on whether national ministers were right to go against the EC recommendation.

"In our view, the council conclusion was not the appropriate procedure. We are not asking the court to give judgement on the economic aspects of the conclusion," he explained to the Guardian on Tuesday.

Meanwhile, speaking following a meeting with the Belgian Prime Minister, French Prime Minister, Jean Pierre Raffarin revealed that he is not concerned over the outcome of the legal action launched by the EC.

"I respect the decision of the Commission, but I'm not worried about the result," he announced.

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