The European Commission will propose on Wednesday to end the European Union's disciplinary action against France over the country's excessive budget deficit, a Commission source said.
The euro zone's second-biggest economy breached the bloc's budget gap ceiling of 3 per cent of gross domestic product in 2002, 2003 and 2004. Paris managed to cut the deficit to 2.9 per cent of GDP last year and the Commission's latest forecasts showed the shortfall would diminish further to 2.7 per cent this year, 2.6 percent in 2007 and 2.2 per cent in 2008.
"The Commission is recommending to put an end to the excessive deficit procedure against France on the basis of its forecasts," the source, familiar with the proposal to be adopted by the EU's executive body, said today. This is in line with a November 6th statement from Economic and Monetary Affairs Commissioner Joaquin Almunia that the Commission would deal with the French deficit procedure in the last week of November.
The procedure is meant to discipline member states that exceed the deficit ceiling. It can produce fines if the limit is repeatedly breached and EU finance ministers' requests to reduce it are ignored. It is part of the EU's Stability and Growth Pact - a set of budget rules drawn to limit government borrowing and underpin the single currency, the euro.
The disciplinary procedure against France is to be formally ended only by EU finance ministers, probably at their next meeting in January.