Brussels battles to contain its budget and Greece

12/09/11 20:14 CET

europe

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The EU could find itself facing a war on two fronts, over its budget and Greece. At a time of belt-tightening back home nine individual member states including the UK, France and Germany joined forces in Brussels on Monday to condemn Europe’s plans to balloon its income.

If that wasn’t bad enough, Finland also repeated its threat not to contribute to the next Greek bailout without a collateral guarantee.

Alexander Stubb, Finnish Minister for European Affairs, said: “For us it’s not a question of money, it’s a question of principle. If you have a set of rules, you have to stick to those rules. And collateral was part and parcel of a broader government deal in Finland and of course we all know that a lot of the European agenda is driven by domestic interest in this particular moment.”

In spite of the potential budget backlash the immediate priority for Brussels remains Greece and fresh fears over its solvency. The EU Commission insisted things were still on track.

“There has been enormous progress in Greece in terms of fiscal consolidation. Greece was on track to meet its targets in 2010 and now it’s working hard and recent decisions confirm that commitment in order to close the fiscal gap for 2011 and 2012,”

EU Commission spokesman Amadeu Altafaj-Tardio said.

Nevertheless, deep uncertainty, unsettled by weekend reports that the German government has been preparing for an orderly Greek default, continue to rattle markets.

More about: Euro in crisis, Finland, Greece

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