EU: Italy, which holds the EU Presidency, has described the Stability and Growth Pact as "finished" in its present form, following this week's decision to spare Germany and France from disciplinary procedures.
The French Finance Minister, Mr Francis Mer, suggested that the pact should be revised in 2005, the year in which Paris and Berlin have promised to bring their budget deficits within its limit of 3 per cent of GDP.
Mr Gianluigi Magri, a senior official at Italy's finance ministry, said that Tuesday's decision had highlighted the need for changes to the pact.
"Pact 1 is finished with. We need to change the parameters in a Pact 2 because the first was found to be too constrictive," he said.
Following crisis talks with Commissioners in Brussels yesterday, the Commission President, Mr Romano Prodi, said that it was clear that the present situation was no longer satisfactory.
"The real question therefore is how to establish future objectives and instruments of economic policy. The Stability and Growth Pact is part of this system because the Union needs budgetary discipline and stability," he said. Mr Prodi reiterated the Commission's regret over Tuesday's decision, adding that the rigorous application of agreed rules was the only guarantee of equal treatment for all EU member-states.
"The Council cannot resort to ad-hoc measures to suspend or amend the pact every time it deems that its provisions are too stringent or inopportune. We cannot have rules 'à la carte'. We all have to play by the rules of the treaty and the pact," he said.
Germany's Finance Minister, Mr Hans Eichel, remained unrepentant yesterday, dismissing speculation about the pact's future.
"I can only advise the Commission to come out of its corner and stop sulking as quickly as possible because we need a functioning co-operation between the Commission and the Council and because we want to work with the Commission," he said during a debate in the Bundestag.
Most European newspapers condemned the decision to let France and Germany off the hook.