Four euro zone countries risk breaching the European Union’s budget deficit rules next year, according to Dutch Finance Minister Gerrit Zalm, current chair of the EU’s council of finance ministers.
He warned that Germany, Italy, Portugal and Greece risk going above the limit of three per cent of gross domestic product unless they change their policies. The Commission is likely to predict Italy’s budget shortfall could break the barrier in 2005 because of planned income tax cuts. Meanwhile ministers have welcomed a review now underway of Greece’s deficit and budget figures going right back to 1997, urging all sides to improve the quality of such data as a matter of priority. Greece’s new centre-right government recently restated accounts, showing the previous socialist administration ran up a deficit over the EU limit every year between 2000 and 2003. The socialists have denied accusations that they falsified data to comply with EU criteria before adopting the euro currency in 2001.