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Europe

Six New Members to Face Spending Rap

Six of the ten countries who joined the European Union last week are to be warned that their budget deficits are too high.

The warnings mark the first step in a disciplinary procedure designed to limit budget deficits - or surpluses - to less than three percent of Gross Domestic Product (GDP).


In theory, repeated transgression from these rules could result in massive fines, however no such fines have ever been imposed and the new members are likely to be given significant leeway to put their books in order.


According to Spanish financial daily Cinco Dias, Poland (with a deficit of 4.1 percent), Hungary (5.9 percent), the Czech Republic (12.9 percent), Slovakia (3.6 percent), Cyprus (6.3 percent) and Malta (9.7 percent), are all likely to receive warnings in the coming weeks.


According to newswire EFE, the new economic affairs commissioner, Joaquín Almunia, will propose next Wednesday (12 May) that disciplinary procedures be initiated. The move is likely to be seen as a message that the new member states should move toward convergence with the euro zone's rules without delay. "It would be a great mistake not to apply the rules of the treaty from the first instance", said Mr Almunia during a meeting with the Spanish press yesterday.


None of the ten new members have the option of remaining outside the euro zone under the terms of their accession. On 15 May the ten countries that joined the EU last Saturday are scheduled to give in their plans for converging with the euro rules. 23 June has been earmarked as the date for the Commission's response. (EUobserver.com)

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