Expatica news

EU holds crisis talks on budgets

26 November 2003

BRUSSELS – The European Commission was meeting Wednesday for crisis talks on this week’s controversial eurozone deal allowing France and Germany to escape sanctions over their budget deficits.

EU sources said the Commission – eurozone watchdog as well as the executive agency of the European Union – was furious at the eurozone deal brokered on Tuesday by Italy.

The EU executive had wanted to launch disciplinary action against France and Germany which would have given it powers to supervise both countries’ spending plans. But it was over-ruled by a majority of EU governments.

The agreement effectively suspends any threat of sanctions against the two economic giants which have run up budget deficits in excess of the limit of 3 percent of gross domestic product (GDP) stipulated in the eurozone stability pact.

The Commission is not likely to take the issue to the bloc’s Luxembourg-based Court of Justice, observers say.

But European Commission President Romano Prodi is expected to make it clear that the flouting of the stability pact is a dangerous precedent for a Union based on compliance with rules.

Subject: German news