European Commission Warns Five EU Member States Over Deficits

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

30 January 2004

The European Commission on Wednesday issued a warning to five EU member states with regard to their budget deficits.

In separate economic assessment reports, the Commission warned France, Germany, the United Kingdom, Italy, and the Netherlands that their deficits are either in breach of the 3% of GDP ceiling imposed by the Stability and Growth Pact, or risk becoming so in the next couple of years.

As the EC took legal action with the European Court of Justice (ECJ) over the Council of Ministers' decision to let Germany and France, at least temporarily, off the hook, it emerged that the latter country may remain in breach of the Stability and Growth Pact until 2007.

Although minor reforms to the eurozone agreement are anticipated, Economic and Monetary Affairs Commissioner, Pedro Solbes revealed recently that the EC has no intention of increasing the 3% limit, or of making any major changes to the structure of the Pact.

"The idea of the fiscal framework is correct, the idea of the 3% is correct," he announced this week, concluding: "No modification of (the) treaty is required."

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