EU to warn six over budgets

EUROPEAN Union Monetary Affairs Commissioner Pedro Solbes yesterday confirmed news reports his office will warn six EU countries today for having budget deficits that are expected to be over 3% of gross domestic product in 2004.

However, the Commission won't launch any procedure against these countries that could result in a fine, added Mr Solbes.

Such a procedure was brought against France and Germany, resulting in a January lawsuit. He spoke to reporters before appearing before the EU parliament's Committee on Economic and Monetary Affairs.

The Commission is due to deliver its spring economic forecasts on Wednesday. Mr Solbes said on Friday at a meeting of EU finance ministers in Ireland that projected EU growth for 2004 would be 1.7% or 1.8%, less than half the over 4% expected in the US.

Mr Solbes will outline his concerns about the excessive deficits when he presents the spring forecasts.

The six countries to receive deficit warnings are Italy, France, Germany, Greece, Britain and the Netherlands. Asked if this was accurate Mr Solbes said: "It's easy to figure out."

EU budget rules prohibit deficits of more than 3% of GDP but with more countries breaking the rule, it has become harder for the Commission to enforce, leading many observers to call the rule 'dead' and diminishing the credibility of Brussels as a guide on national economic policies.