Analysis: Finance ministers will now be looking to reform the Stability and Growth Pact, writes Denis Staunton in Brussels.

The ruling yesterday by the European Court of Justice was a welcome boost to the European Commission in its campaign to retain influence over economic governance in the euro zone.

By annulling last November's decision by EU finance ministers to suspend the Stability and Growth Pact's excessive deficit procedure in the case of France and Germany, the Court has also made clear that the same rules must apply to all member-states, regardless of their size.

The ruling was sufficiently subtle, however, to satisfy national governments that the Commission cannot expect to have full control of the application of budget rules. The court upheld the right of finance ministers to reject the Commission's recommendation of disciplinary procedures against Paris and Berlin.

Both sides in the dispute - who were ordered to pay their own costs - gave the ruling a measured response yesterday, welcoming its clarification of the budget rules and promising to reflect before taking further action.

Austria's finance minister, Mr Karl-Heinz Grasser, a harsh critic of his fellow ministers' decision last November, was alone in demanding that the Commission should immediately set fresh deadlines for France and Germany to reduce their budget deficits.

Mr Gerrit Zalm, the Dutch finance minister who is currently chairman of the Ecofin and euro group of finance ministers, was more cautious yesterday. Two weeks ago, Mr Zalm made clear he believed that if the court ruled against last November's decision, the ministers would have to make a new one.

Many other ministers believe that the dispute with the Commission is much ado about very little, particularly in view of the fact that France and Germany have promised to take the steps the Commission demanded. They point out that November's decision included a warning to Paris and Berlin that the excessive deficit procedure could be reactivated if they failed to keep their promises.

The next meeting of EU finance ministers is in September, when they are due to discuss a possible reform of the Stability and Growth Pact. Few expect that reform to lead to a change in the text of the EU's budget rules but it could make changes to the way it is implemented.

Most ministers agree that the pact should be applied more flexibly to take into account the different underlying situations in the member-states. Thus, countries with lower public debt burdens might be allowed more leeway with budget deficits.

Other options under discussion include a mechanism to calculate budget deficits over the economic cycle rather than on a simply annual basis.

The Dutch presidency is eager to incorporate a declaration to be included in the new constitutional treaty that would oblige countries to use benign economic circumstances to improve their fiscal situation.

Ministers are also considering bringing forward a proposal in the constitutional treaty to appoint a chairman of the euro group, where euro-zone finance ministers meet, for a two-and-a-half-year period. Some critics fear that such a move could strengthen too greatly the ministers' political control of economic and monetary union, at the expense of the Commission and the European Central Bank.

Yesterday's decision could help to dispel such doubts and to lay down the ground rules for any changes to the Stability and Growth Pact and for the sharing of power within the economic governance of the EU.