France and Germany off the hook for this year’s excessive budget deficits

Warning of sensitive budget conditions in France and Germany, Europe’s Economic and Monetary Affairs Commissioner Joaquin Almunia has suspended excessive deficit procedures against the two, in exchange for their commitments to return to within the EU’s limit of three percent of GDP next year.

Pursuit of the Stability Pact’s disciplinary action would, potentially, mean fines. Both Paris and Berlin said the suspension reflected well on their efforts to deal with a difficult set of circumstances. The Commission nonetheless said it would continue to monitor the corrective measures. France’s deficit this year measured 3.7%, Germany’s 3.9%.

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