Frankrijk zal Stabiliteitspact waarschijnlijk tot 2007 schenden (en)

Tomorrow may see battle commence again over the rules underpinning the euro. French financial daily Les Echos has learned that the European Commission is to express concern that France may continue to breach the rules until 2007.

These rules state that every country that has adopted the euro must strive for a budget deficit below three percent of gross domestic product (GDP).

But a report to be unveiled by the Commission tomorrow is expected to say, "unless policy changes, the country will not have a budget that allows it sufficient safety to ensure that its deficit does not exceed the three percent limit until 2007".

If the Commission report is right, France would have breached the pact for six successive years.

This situation would normally have led to large fines, but the deficit rules are currently in turmoil after Finance Ministers voted to effectively suspend the disciplinary procedure last November. This move has prompted the Commission to pursue a case against them in the Court of Justice.

However, the report will still cause controversy, because Paris will not enjoy such a reprimand from the Commission at a time when rows over the future EU budget and the Constitution are already fuelling tension.

France has set out its own programme of deficit reduction and project deficits of 2.9 percent (just under the bar) in 2005 and 2.2 in 2006 - the Commission is essentially saying that their efforts are not enough.

Pact reform?

Meanwhile, Irish Finance Minister and current head of the Council of Finance Ministers Charlie McCreevy yesterday (26 January) hinted at possible reforms to the euro rules including a requirement that euro zone governments put money aside during economic booms to counter deficit increases during recessions.

Economics and monetary affairs commissioner Pedro Solbes will unveil proposals for a reform of the pact late next month.