EU drops deficit action against France

30th January 2007, Comments 0 comments

BRUSSELS, Jan 30, 2007 (AFP) - EU finance ministers on Tuesday dropped disciplinary action against France over its public finances on evidence that Paris had brought its deficit in line with the bloc's fiscal rulebook, EU officials said.

BRUSSELS, Jan 30, 2007 (AFP) - EU finance ministers on Tuesday dropped disciplinary action against France over its public finances on evidence that Paris had brought its deficit in line with the bloc's fiscal rulebook, EU officials said.

France's EU partners launched the action against France in 2003 after the French public deficit breached an EU limit of three percent of gross domestic product the previous year.

The European Commission, which polices members' finances, last November determined that France was no longer a deficit miscreant after finding that the country's 2005 fiscal shortfall came in at 2.9 percent and was expected to keep falling.

Like the other countries sharing the euro, France faced hefty fines if it broke the three-percent limit too long and ignored its commitments to improve its finances, although none of the 13 countries has ever met that fate.

After struggling to meet the three percent rule, France and Germany spearheaded efforts to revise the treaty of which it is a provision -- the Stability and Growth Pact.

Following long and difficult negotiations, they convinced fellow EU members to agree in 2005 to water down the beleaguered pact, which some private economists and the European Central Bank considered a brutal blow to budgetary discipline.

The revised fiscal rule book gives countries more leeway to run deficits over the three percent limit during weak economic growth although they are required to not lose sight of the target over the medium term.

Copyright AFP

Subject: French news, EU

0 Comments To This Article