France, Italy, Belgium will have three extra months on deficit and debt

The EU commission on Friday is set to give France, Italy and Belgium three more months to implement deficit-and-debt cutting measures or face fines, reports www.euobserver.com.

 Hollande got his way with the Juncker commission. It is the first time the commission splits its verdict on national budgets into two parts: acknowledging that France, Italy and Belgium are in breach of the deficit-and-debt rules (Stability and Growth Pact), but delaying a decision on the consequences until March.

 ”We received letters at the highest level from three countries. These are high level assurances we asked for, so we will check now how they are applied and issue the recommendations in March,” an EU official said.

 France has already twice received a postponement of its deficit reduction deadline, which should have been under three percent of GDP by 2015. But according to its draft budget, it plans to run a deficit of 4.3 percent of GDP in 2015 and will meet the three-percent target only in 2017.

  Paris adopted a last-minute promise to shave €3.6 billion off the deficit – but critics noted that no new reforms are being undertaken.

 If in March the commission is still not convinced that Paris is taking real action to meet the deficit target, France could face a fine of up to €4.2 billion.

 Italy and Belgium are blacklisted because of their public deficits, which are far above the 60 percent of GDP foreseen in the Stability and Growth Pact. Instead of going down, their debt is ballooning and if no measures are taken by March, the commission may place the two countries under increased control over their fiscal and economic policies.

Source: euobserver.com