The European Commission
announced Wednesday that it was giving three of the
biggest economies in the Eurozone - - France, Spain, the Netherlands - - and two
other countries more time to meet their deficit targets as the executive of the
European Union relaxed its austerity policies. It warned that the region’s
economy was deteriorating fast and needed urgent action or Europe faced the
prospect of social and political unrest.
France, the European Union’s second-biggest economy, was given two extra
years to cut its deficit to 3% of GDP (gross domestic product), extending the
deadline to 2015. The Commission has agreed a deficit target of 3.9% of GDP for
this year and 3.6% in 2014.
José Manuel Barroso, European Commission president, told France to use the
extra time “wisely” to restore lost competitiveness, by reducing labour and
social security costs. “We’re not offering an easy way out, we’re being
demanding,” he said at a news conference.
The Commission recommendations require the approval of heads of EU
The Netherlands, another core European economy, was given just an additional
year to meet the official deficit goal of 3%. Its 2013 target is 3.6%.
The Commission gave Spain an extra two years to cut its deficit. So Madrid
has until 2016 to reach the 3% level. In 2012, when Spain was given a banking
bailout, it was also allowed to extend the fiscal adjustment period to 2014 to meet the 3% target. Spain’s new deficit
targets are: 6.5% in 2013, 5.8% in 2014 and 4.2% in 2015.
Poland and Slovenia got two extra years to meet their targets.
A summary of today's reports warns that economic reforms were slower than
“desirable” to trigger growth, warning that despite the quieter atmosphere
in the financial markets, the EU faced significant economic risks in the near
“The impact on society of several years of low or no growth is far reaching,
with very high levels of unemployment and rising poverty in several parts of
Europe,” the summary says. “The dim prospect for labour market improvements in
the short term will be a further test for the welfare systems of member states.
It will take time for the positive effects of today’s decisions to work their
way through into a more dynamic, growing, job-creating economy.”
The Commission removed Italy, Latvia, Lithuania, Romania and Hungary from the
so-called Excessive Deficit Procedure, which will result in the release EU funds
The Commission gave Belgium until September to take
new measures to get its fiscal situation in order or risk a fine. The country
will stay under deficit surveillance. It also placed Malta in its
deficit-monitoring program and said that Slovenia, whose banking problems have led to
speculation it may need a bailout, must undertake an independent audit of its
EU country codes
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