The European Commission will reportedly propose this week that Germany, France and Spain should have until 2013 to cut their budget deficits below three percent of GDP.
The European Union’s executive arm is particularly concerned about France saying its budget deficit will hit 8.3 percent of GDP this year and Paris should step up its efforts to reduce public spending. It will also recommend that Italy’s deficit ought to be below the three percent EU stability pact ceiling for deficits by 2012. The 27 EU finance ministers are meeting in Brussels before a formal announcement on deficits on Wednesday. The ministers believe that setting a timetable for bringing public finances back in order is necessary to keep markets and consumers confident in government fiscal policy. They are also discuss when to start withdrawing fiscal stimulus from the region’s economy. Budget deficits have ballooned as countries have abandoned fiscal discipline with stimulus measures to combat the recession. Britain, which is one of the region’s worst hit economies, will be given until 2015 to cut its public debt.