EC finance ministers to reaffirm deficit deadline

The European Commission said it expects EU finance ministers, at a meeting tomorrow, to approve broad economic policy guidelines committing all member states to a 2004 deadline for balancing their budgets.

The new centre-right French government has pledged to respect the EU stability and growth pact but has stopped short of saying it will honour the 2004 deadline.

Commission spokesman Gerassimos Thomas said however that the ministers, "should be in a position to adopt a text that is satisfactory," at their meeting in Madrid ahead of the EU summit in Seville, southern Spain, on Friday and Saturday.

The French government has said it will not know the true state of public finances until it has completed an audit, probably at the end of the month, Thomas said.

He said the commission has no fresh information from the French government on the question, and declined to say whether it was resolved on the sidelines of the G7 finance ministers' meeting in Halifax over the weekend.

Questioned about suggestions by the German government yesterday that France will this year come close to the deficit threshold of 3.0% of GDP, European Commission president Romano Prodi said the commission would not hesitate to use the early warning device again if necessary.

Earlier this year, the commission warned Germany and Portugal over their soaring deficits. Finance ministers subsequently overturned the warning.