EU urges France to improve finances

23rd January 2007, Comments 0 comments

BRUSSELS, Jan 23, 2007 (AFP) - The European Commission on Tuesday called on Germany, France, Italy and Slovenia to step up efforts to improve their public finances despite booming tax revenues.

BRUSSELS, Jan 23, 2007 (AFP) - The European Commission on Tuesday called on Germany, France, Italy and Slovenia to step up efforts to improve their public finances despite booming tax revenues.

While surging tax revenues are helping them meet deficit targets, the EU executive said in a review of their finances that the state coffers would come under strain in coming years and further efforts were needed.

"The pitfall of mostly relying on the cyclical boost in revenue in good economic times to improve fiscal outcomes, as has happened in the past, should be avoided this time," said Economic and Monetary Affairs Commissioner Joaquin Almunia.

The eurozone economy is currently enjoying the strongest growth since the turn of the century, pumping unexpectedly strong revenues into government coffers.

The European Commission estimates that the eurozone economy expanded 2.6 percent last year and expects it to keep up the pace this year.

Thanks to strong tax revenues, Germany, France, Italy and Slovenia had met or were on track to meet an EU target of keeping their deficits to less than three percent of output as required by the EU's Stability and Growth Pact.

However, in Germany increased social spending and a reform to company taxes in 2008 would put pressure on German finances in the coming years, the EU's executive arm said.

Meanwhile, French and Italian finances would suffer under the weight of their considerable debt and the growing costs related to their ageing populations.

Although Slovenia -- which became the 13th eurozone member this month -- had low debt, its ageing population would put the country's finances "at high risk" after 2020.

The commission said that the outlook for Netherlands' finances appeared sound, although currently high gas receipts were not likely to persist in the future.

Outside the eurozone, the commission praised Denmark and Cyprus for keeping healthy accounts, although the costs of ageing would be a long term risk for the Mediterranean island.

It also called on Slovakia to make further efforts to rein in its public finances, especially after this year, in order "to be able to face possible challenges in less positive periods of the economic cycle".

Copyright AFP

Subject: French News

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