Euro states told to prepare for years of reform
EUROPE faces a slow and painful struggle before its economies can start growing strongly again, warned Commission president Jose Manuel Barroso yesterday, praising the efforts of Eurozone governments in cutting budget deficits.
The EC published its annual scorecards judging the success of member states’ economic policies, and recommended that even strong countries like Germany need to reform their economies further, as well as identifying expected problems in the struggling peripheral and indebted governments.
Spain was thrown a lifeline by commissioner Olli Rehn who said Brussels is ready to give the country an extra year to bring down its budget deficit, giving more time to rein in its profligate regional governments and recapitalise its troubled banks.
France was not given such an offer of help – the report said the country is likely to miss its deficit goal next year unless additional spending cuts and tax rises are implemented.
In his election campaign new President Francois Hollande promised to boost economic growth with increased spending, and he also pledged to renegotiate the fiscal compact under which countries promised to reduce deficits.
“The French authorities need to specify the measures necessary to ensure that the excessive deficit is corrected by 2013,” said the EC.
The report deemed Germany’s deficit plan “plausible,” but urged further reforms to help the country cope with the cost of long-term health care, and criticised the lack of progress in implementing budgetary controls at a regional level.