THE European Commission is expected to report today that most of the European Union's members have their 1997 budget deficits under control and will be ready to join a single currency, EU officials said.
The twice yearly review of EU economic and budgetary conditions, often criticised for being politically influenced is expected to forecast that only Italy and Greece may be unable to wrestle public deficits down to 3 per cent of gross domestic product, the Maastricht treaty target. Ireland is well within the 3 per cent ceiling.
The Commission executive's report will also mark a clear difference of opinion from that of the more critical views of Europe's central bank in waiting the European Monetary Institute (EMI), the sources said.
The economic convergence reports from the Commission and the EMI will help EU finance ministers to decide which countries should enter the single currency.
In its latest annual report, the EMI said most EU governments still had further work to do in curbing public expenditure, a view echoed by the International Monetary Fund (IMF).
A senior IMF official on Monday warned that Germany, France and Italy all needed to do more to cut their budget deficits in order to qualify for EMU.
The IMF offers its own forecasts for the EU's budgetary and economic performance later this week.
In addition to 1997 forecasts on deficits, debt, GDP growth and inflation, the Commission will also look ahead to 1998 providing markets with important food for thought.
EU policy makers have repeatedly argued that budgetary consolidation efforts by governments must be judged in terms of sustainability and not just their performance in 1997.
For Italy, this is seen as a particular problem given the heavy burden of one off savings measures contained in its latest 1997 budget blueprint.
And while Germany and France, the two main engines behind the drive towards monetary integration, are expected to win a favourable review from the EU, expectations in the private sector are for additional spending and tax measures.
France, now facing a snap election in a matter of weeks, is widely seen to be in need of a cash boost from social security charges this year.
Germany, struggling under the weight of record unemployment, may require the fine tuning of a supplementary budget.
