The European Union's much flouted budget rules are too strict, the European Commission admitted today.
It also gave six of the EU's newest member states leeway on controlling their budgets but told Greece to bring its deficit below the EU cap of 3 per cent of gross domestic product by 2005, the same deadline set for Germany and France.
European Monetary Affairs Commissioner Mr Joaquin Almunia said elements of the Stability and Growth Pact, which underpins the euro, were too rigid - a charge already made by the euro zone's biggest economies, which have broken or risk breaking its rules.
"The experience of the last five years has demonstrated that in some cases at least the regulations might have been too stringent and reduced our room for manoeuvre," said Mr Almunia, the Commissioner responsible for enforcing EU budget discipline.
Without making formal proposals on how to change the rules, he indicated the EU executive would consider loosening the pact's get-out clause by redefining the circumstances that warrant leniency on budget offenders.
EU advisers last year suggested the conditions should be changed so that a country can break the EU deficit cap if its economy contracts at all for a year, rather than only if it shrinks by at least 2 per cent as under the current rules.
Mr Almunia also said more account could be taken of debt, states could be treated on a more case-by-case basis, the rules should take more account of economic downturns and there could be incentives to improve budget positions in good times.
Mr Almunia's suggestions for how to change the pact came as the Commission moved ahead with budget disciplinary procedures against Greece and six of the EU's new member states.
The Commission gave Athens a November deadline to take steps that would bring its budget deficit below EU limits in 2005, urging Greece to cut its debt and improve its budget data. It was more lenient towards new EU entrants which had run deficits above the EU cap in 2003.