No ‘serious’ fault found, France, Italy budgets pass EU review

BRUSSELS (AFP) ― The European Commission said Tuesday it had found no serious fault with eurozone member states’ 2015 budget plans, clearing France and Italy after they made last-minute changes to meet EU demands.

The budget review covered all 18 eurozone countries, with the focus on struggling France and Italy after Brussels told them that their original plans fell well short of what was required to meet European Union norms.

“After taking into account all of the further information and improvements ... I cannot immediately identify cases of particularly serious non-compliance which would oblige us” to reject the planned budgets, EU Economic Affairs Commissioner Jyrki Katainen said.

The Commission, the European Union’s executive arm, gained far-reaching powers during the debt crisis to vet eurozone budget plans to ensure that member states did not exceed the deficit ceiling of 3 percent of gross domestic product.

France, however, had forecast a deficit ― the shortfall between government revenue and spending ― of 4.3 percent for 2015, saying it would not reach the EU target until 2017.

It could do no better, Paris said, because the economy had stalled and it needed more time to push through the difficult structural reforms needed to get the economy growing again.

That was clearly not good enough for Brussels, with Katainen demanding an explanation and proposals to remedy the problem.

In response, French Finance Minister Michael Sapin on Monday announced some “good news” ― he had managed to find another 3.6 billion euros ($4.6 billion) to reduce the deficit.

“I think that France here is offering clarifications and elements that should allow us to stay on course,” Sapin said, stressing that the government was making use of all the flexibility possible under EU rules.

For Italy, the problem is with the structural budget deficit ― the underlying shortfall left after variables are stripped out.

Economy Minister Pier Carlo Padoan pledged to reduce the structural deficit by 0.3 percent of GDP in 2015, instead of the original 0.1 percent.