EU keeping options open on French budget deficit

29th June 2005, Comments 0 comments

BRUSSELS, June 29 (AFP) - The European Union is keeping "all options open" on the budget deficits of France and Germany, economic and monetary affairs commissioner Joaquin Almunia said on Wednesday.

BRUSSELS, June 29 (AFP) - The European Union is keeping "all options open" on the budget deficits of France and Germany, economic and monetary affairs commissioner Joaquin Almunia said on Wednesday.

Almunia said the commission would examine budget developments in Germany and France and take the necessary decisions once it had received updated information from the two governments in September.

Both countries have public deficits exceeding the limit of 3.0 percent of gross domestic product (GDP) imposed on the 12 nations using the euro single currency.

On Wednesday the commission gave Italy at least two years on Wednesday to bring its deficit back within eurozone guidelines, in its first such procedure since a major overhaul of the eurozone fiscal rules earlier this year.

Almunia said there were three possible options for France and Germany.

These were: taking no action if the deficit moves back within the rules, recommending more time if some progress is made but not enough, and launching the excessive deficit procedure.

"These three options remain open and we will study them once we have information from France and Germany in the last three months of the year," he told reporters.

The EU's Stability and Growth Pact was made more flexible this year, after being effectively suspended when France and Germany escaped sanctions despite repeatedly breaching the rules.

Meanwhile Almunia also said he did not know whether Portugal's breach of the euro rule book would be regarded as having been a result of special circumstances.

The notion of special circumstances, which can allow governments to breach the deficit limit, has to be applied differently in each country, he said.

The commission launched an excessive deficit procedure against Portugal on June 22 after the government said it expected to post a deficit of 6.2 percent of GDP this year.

Copyright AFP

Subject: French news

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