EC Praises Bulgaria, Warns 9 Member States over Bloated Deficits

The European Commission has praised Bulgaria for keeping its budget deficit within the agreed scope as it named and shamed another nine member states that breached the fixed limits.

Bulgaria, Cyprus, Denmark, Finland, Luxembourg, Sweden and Estonia are the seven EU member states said by a commission spokeswoman to have "done their homework" by remaining within the agreed scope of 3% of gross domestic product (GDP).

Austria, Belgium, the Czech Republic, Germany, Italy, Slovakia, Slovenia, the Netherlands and Portugal became the latest to break commitments to hold deficits within the limit.

Just in Germany, Europe's biggest economy, leaked government documents show that the public deficit needs to be cut by EUR 40 B between 2011 and 2013.

"Although the deficit levels are exceptional in nature... they are neither close to the reference value nor temporary," said a damning statement by the European Commission.

The EU executive warned that it will soon take legal action that could see all 27 EU governments collectively order these countries to bring their deficits under the limit by a target date.

The EU's Stability and Growth Pact requires member states to keep their budgetary deficit under the 3% limit, which only allows temporary breach to a small extent under exceptional circumstances.

Economic and Monetary Affairs Commissioner Joaquin Almunia said the bloc's stability and growth pact, the cornerstone of its economic policy, "is sufficiently flexible to combine the fiscal stimulus in the short term with consolidation of the public finances in the medium term."

Brussels had already launched action against Latvia, Lithuania, Malta, Poland and Romania in July following earlier procedures against France, Greece, Ireland and Spain.

The commission expects average eurozone deficits to hit 6.5 % of GDP in 2010, compared to 0.6 % in 2007. Average debts are slated to reach 83.8 % of GDP, against 66 % in 2007.

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