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Member states told to do more to deal with deficits

Commission publishes its review of the economic strategies of ten member states.

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Ten member states were today told by the European Commission to present more precise plans on how they intend to reduce their budget deficits to bring them back into line with EU rules.

The Commission published its review of the economic strategies of the ten member states (Denmark, Hungary, Latvia, Lithuania, Luxembourg, Malta, Poland, Romania, Slovenia and the Czech Republic) after reviewing the plans of 14 countries last week.

“All member states, except the UK…seem to be willing to respect the deadlines of the excessive deficit procedure, but the details of how this will be achieved is not yet there,” said Olli Rehn, the European commissioner for economic and monetary affairs.

EU countries are meant to get their budget deficits down to 3% of gross domestic product (GDP) by 2012. The UK has presented plans to get its deficit down to 3 % by 2014-15.

Rehn said the ability of all EU member states to get their deficits under control and below the 3% limit was “the first real test for the implementation of the fiscal exit strategy” that EU countries agreed last year.

Many of the budget plans of the ten countries reviewed were too vague, Rehn said. The Commission said that the ten countries were relying on optimistic economic growth forecasts.

Similar criticism was levied at 12 other EU nations last week over their efforts to bring get their deficits down to 3% of GDP.

Government deficits and debt have soared after they spent billions to prop up ailing banks and spur economic growth.

Romania, with a budget deficit of 8% of GDP, and Poland, with a 7.2% deficit, had the most to do to meet EU spending targets. Luxembourg and Malta, both of which are expected to post 3.7% budget deficits this year, had the narrowest gaps to meet.