EU commissioner proposes deficit deposit: report

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Countries that break EU deficit rules should pay up to 0.2 percent of their gross domestic product as a deposit to ensure they reduce their deficits, the EU's economic affairs commissioner has said.

Olli Rehn, speaking in an interview with the Financial Times Deutschland due to be published on Friday, said the measure would help enforce the current public deficit limit of three percent of GDP, which is widely flouted.

The European Commission is set to make concrete legislative proposals on reforming economic governance in Europe next Wednesday. Rehn said the recommendations could include an enforcement mechanism for deficits.

European finance leaders have so far failed to agree on such a mechanism at a time when many European Union member states are facing serious difficulties in their public finances and have ballooning deficits.

© 2010 AFP

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