Brussels Stays Firm on Euro Rules

Despite reforms to the rules underpinning the euro, countries in breach of them can expect little leniency, according to a European Commission document. EU Economic Affairs Commissioner Joaquin Almunia said, "the obligation on any member state that breaches the rules to take prompt corrective action still stands." He stressed that countries still need to keep budget deficits below three percent of gross domestic product (GDP) and debt levels below 60 percent of GDP. Paris and Berlin have broken these rules for three consecutive years, but both have pledged to creep back under the ceiling in 2005. The problems caused by the euro rules have forced the Commission to consider ways to reform the pact. In future, Brussels intends to place much greater emphasis on debt and take individual countries' economic situations into account. Overall, the Commission's assessment of the economic situation in the euro area was relatively positive. Growth has progressed "slightly faster than expected" and "should continue to expand at a similar pace throughout the rest of this year," according to the report. Despite this, the document warns, "there are no grounds for complacency. The recovery still looks relatively timid." (EUobserver.com)