Brussels, 06/04/2004 (Agence Europe) - At the same time as the presentation of its Spring economic forecasts, the European Commission will launch procedures on Wednesday to avoid excessive public deficits in at least two Member States, Italy and the Netherlands. The Commission could also recommend that Greece and the United Kingdom take measures to come into line with provisions of the Stability and Growth Pact on the ceiling of 3% of GDP for public deficit.
Compared to last autumn's forecasts, the Commission is amending its estimations only slightly downwards for economic growth, said Commissioner Pedro Solbes on Tuesday, during his last hearing before the MEPs of the Parliament's Economic and Monetary Committee (before he becomes Economy and Finance Minister within the Socialist Spanish Zapatero government).
The Commission will address the Netherlands on its deficit, which will be the first step towards opening the procedure for excessive deficit. The Commission believes that the Dutch deficit in fact rose to 3.2% of GDP in 2003. The Commission is, however, unlikely to come down too hard on the Netherlands, whose Finance Minister, Gerrit Zalm, announced last Friday that he would shortly be taking measures to clean up the country's finances (see EUROPE of 6 April, p.10).
The European Commission is also likely to begin an early warning procedure against Italy, to make sure that the Italian deficit does not reach the fateful threshold of 3% of GDP. Italy's public deficit rose to 2.4% in 2003, but would have exceeded 4% had the Member State not brought in exceptional measures. According to the Italian press, the deficit will be around 3.3% or 3.4% in 2004 (see EUROPE of 6 April, p.10, and p.7).
The United Kingdom could also attract the Commission's wrath if it turns out that its deficit exceeded 3% of GDP in 2003.
The Commission may still open a procedure against Greece, if the audit requested by the new government reveals that the public deficit has slipped beyond what is allowed.
The only encouraging piece of news is that the Commission is to announce the end of the excessive deficit procedure against Portugal, whose public deficit passed 3% of GDP in 2001.
The Commission's budgetary forecasts show no improvement in the euro zone. Public deficit in the euro zone will remain around 2.6 - 2.7% of GDP, and several countries (France and Germany, for starters) will have deficits well beyond the reference value of 3%. "Budgetary consolidation efforts in these countries" will be necessary, especially if growth continues as forecast, Mr Solbes told the EP's Economic and Monetary Committee.
The Commissioner confirmed that growth reached 0.4% of GDP in the euro zone in 2003, and 0.8% in the EU, and that it would be greater in 2004, due to world growth- in the United States especially, but also in China and Japan, and an increase in internal demand. In its spring forecasts, the Commission reviewed the growth estimate for the euro zone in 2004 at 1.7% (from 1.8% in last autumn's forecasts). Mr Solbes listed the risks weighing on the scenario of gradual growth in economic activity in the EU: - the slow rise in consumer confidence; -threats of terrorist attacks; -the possible lack of vigour in investments, taking the state of company accounts into the equation.
This Wednesday, the Commission will also adopt a report on the Member States' implementation of the broad economic policy guidelines (BEPGs). Mr Solbes indicated that it was necessary to "go forward" in applying this strategy, whilst completing it in order to include the new Member States of the EU. "The Commission will not propose any changes to this pluri-annual strategy", said Commissioner Solbes.