EU finance ministers said today there was no need right now to take more budget disciplinary steps against Germany and France for breaking the bloc's budget rules but said they would act in future if needed.
The euro zone's two biggest economies have broken the European Union's deficit cap of 3 per cent of gross domestic product for three years running, but in 2003 they fended off the European Commission's bid to slap them with more disciplinary action.
After a damaging court clash, the EU executive backed down and accepted their deficit cutting pledges at face value.
This won the backing of EU finance ministers meeting today. "The council agrees with the Commission conclusion that no further steps under the EDP (excessive deficit procedure) are necessary at this stage," a summary note said of both Berlin and Paris.
It noted the commitment of Germany and France to bring their deficits below the EU cap in 2005 and keep it under that ceiling in 2006, and made it clear they would be held to their word. "The Commission will continue to monitor compliance with these commitments.
The council, in cooperation with the Commission, stands ready to take steps under the EDP, as appropriate," it said of both countries. The comments come as EU finance ministers are in the throes of debating the best way to reform the Stability and Growth Pact on budget discipline in which the bloc's deficit cap is enshrined.
A separate draft conclusion showed EU finance ministers moving to the next stage of the same disciplinary process against Greece, which has also broken the EU budget deficit cap of 3 per cent of gross domestic product.
They blamed revisions to past budget data, spending overruns linked to the staging of the Olympic Games as well as overruns in some other spending items and shortfalls in some revenues which had not been correctly estimated in the 2004 budget.