EU offers some budget relief to struggling nations

AP News
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Posted: Jan 14, 2015 9:49 AM
EU offers some budget relief to struggling nations

BRUSSELS (AP) — The European Union is giving member states struggling with debt more leeway in their spending plans despite EU rules on deficits and debt.

EU officials raised the possibility Wednesday for nations like Italy and France to contribute to a planned 315 billion euro ($371 billion) investment scheme to spur growth and jobs in Europe, even if their budgets are already under scrutiny by the EU for overspending.

Those that have an EU-approved plan of structural reforms also qualify.

But countries must otherwise respect their medium-term budget plans or face possible sanctions. Commission President Jean-Claude Juncker said: "We haven't changed the rules."

A Commission official on Wednesday said his office is "open for discussion" with countries looking to take advantage of the new rule flexibility, as the bloc eases off its austerity policies of recent years.

If a country does so, the commission could choose not to penalize it even if its budget deficit technically breaches the ceiling of three percent of GDP, he said.

The official spoke only on condition of anonymity because he was not allowed to publicly address the issue.

The biggest advantage for those in financial trouble would come from funding the investment plan, due for launch by mid-2015.

The EU is due in March to examine Italy's finances after ruling last year that its draft budget could breach the rules.

When asked Tuesday whether Rome would contribute to the investment scheme, Prime Minister Matteo Renzi said only that "Italy is ready to play its role."

The head of the BUSINESSEUROPE lobby, Markus J. Beyrer welcomed the new flexibility but warned that it "must be accompanied by proper enforcement" to ensure that EU countries take serious steps to ensure growth.