France may reduce deficit

THERE are signs France was prepared to respond to pressure from its fellow eurozone members and move towards reducing its proposed budget deficit for next year.

Finance ministers from the 12 euro countries devoted their meeting yesterday in Italy to discussing the problem posed by France’s intention to breach the 3% deficit contrary to the Stability Pact.

France has still not submitted its budget plans to the Commission as required but has said it will do so in the next few weeks.

French Finance Minister Frances Mer was left in no doubt yesterday that he abide by pact rules or face a multi million euro fine and sanctions.

A number of small countries before the meeting warned they would ensure France would stick to the rules with the Dutch threatening to take them to the European Court in Luxembourg if necessary.

Finance Minister Charlie McCreevy said: “We are making progress towards a resolution.”

The German deputy finance minister described the discussion as very constructive and said they were making progress while Austrian Minister Karl-Heinz Grasser suggested there were exceptional circumstances facing France.

However, EU Commissioner for Economic Affairs Pedro Solbes said his analysis of France’s position was hampered by the fact that they had so far failed to submit their budget proposals.

French President Jacques Chirac signalled a softening of France’s stance following a meeting with the Spanish Prime Minister, Jose Maria Aznar, in Spain on Thursday when he said France would do all it could to respect the pact.

The finance ministers will consider the French situation at their next meeting in Brussels on October 3.