2-3 year latitude for EU economic stimulus measures: Juncker suggests

(LUXEMBOURG) - EU countries could be be given two or three years leeway to re-launch their battered economies before rules on national deficits are tightly imposed again, eurogroup head Jean-Claude Juncker suggested Tuesday.

"We can't have taboos on financing national and European measures" to stimulate the economy, said Luxembourg Prime Minister Juncker, who is head of the eurogroup of eurozone finance ministers.

"But it must be clear that at the end of a certain period, between two and three years, we must reapply the basic rules of the Maastricht treaty and the standards of the stability pact," which limit public deficits to three percent of output, Juncker told a press conference on the margins of a meeting with Finnish President Tarja Halonen.

On Wednesday the European Commission will present an economic re-launch package expected to be worth around one percent of total EU gross domestic product or some 130 billion euros (169 billion dollars).

"I am in favour of a one percent policy," said Juncker.

"One percent is a level which would allow us to react" to the crisis, he added.

The EU Commission plan will include measures decided at national level by some EU member states, as well as European funding, to boost economies hit by the US-born banking crisis and subsequent global credit crunch that has cut into both spending at home and exports abroad.

The commission, the EU's executive arm, has repeated that it will continue to apply Europe's fiscal rules, notably on budget deficits,

However it has also made it clear that it is taking into account the "exceptional circumstances" in considering state bailouts or failure to reduce public deficits as swiftly as required.