Barroso rejects calls for budget pact revamp

The European Commission's new president rejected calls for a fundamental rewriting of the rules capping budget deficits today…

The European Commission's new president rejected calls for a fundamental rewriting of the rules capping budget deficits today, and stood by two members of his team who are still dogged by controversy.

At his first news conference since taking office on Monday, Mr Jose Manuel Barroso said his executive was determined to get to grips with the challenges of boosting growth and employment, reforming the EU economy and ratifying the EU constitution "to produce a Europe which works and can make a difference".

But he gave no specifics, dwelling instead on the ethical code of conduct adopted by his team, which he was forced to revise after a clash with the European Parliament, particularly over the anti-gay views of an Italian nominee.

Mr Barroso's defence of the Stability and Growth Pact - under which nations sharing the euro single currency must cap public deficits at 3.0 per cent of gross domestic product - came after Italian Prime Minister Mr Silvio Berlusconi sought to open debate.

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"We don't think it would contribute to improving the credibility of the pact to bring about a fundamental review of the pact," the former Portuguese prime minister said.

The previous Commission offered proposals to give eurozone states more flexibility to run deficits during economic downturns provided they have saved money during good years.

That review was triggered by a controversial decision by EU finance ministers last year to suspend disciplinary action against France and Germany, the Eurozone's two powerhouses, after they repeatedly broke the 3.0 per cent limit.

"We are prepared to work with governments in a constructive way to ensure necessary flexibility in respecting the major principles of the pact," Mr Barroso said.