EU fiscal rules on deficits face 'litmus test'

29th November 2005, Comments 0 comments

BRUSSELS, Nov 28 (AFP) - The European Union's revised fiscal rulebook faces a litmus test in the coming months when the European Commission takes action on the British, French, German and Italian deficits, economic affairs commissioner Joaquin Almunia said Monday.

BRUSSELS, Nov 28 (AFP) - The European Union's revised fiscal rulebook faces a litmus test in the coming months when the European Commission takes action on the British, French, German and Italian deficits, economic affairs commissioner Joaquin Almunia said Monday.

"In the next few weeks, the commission is going to make proposals for implementation of the Stability and Growth Pact for Germany, France, Italy and the United Kingdom, the four biggest economies of European Union," Almunia told the European Parliament.

Earlier this year, the European Union relaxed its 1997 Stability and Growth Pact and made fiscal rules more flexible after France and Germany struck a painful blow to the previous guidelines by getting so-called excessive deficit measures against them suspended.

The reform was widely criticised by private economists for taking the bite out of the EU's budgetary rules and generally weakening their credibility.

"Over the next few months, with the implementation of the pact to this group of member states, we will be carrying out a very important test ... It's a litmus test," Almunia told the parliament's economic and monetary affairs committee.

Almunia gave no details about what measures were being planned for the four countries as talks with national authorities and analysis was still underway.

But he urged member states to apply the revised rules seriously, warning that the pact's credibility was at stake.

The pact would only be credible if EU member states enacted "the necessary measures to implement the new rules," Almunia said.

"The credibility of the pact will be at stake over the next few months," he added.

Copyright AFP

Subject: French news

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