Slower growth may see EU ease deficit reduction timetable: Rehn

(BRUSSELS) - EU countries struggling to bring their public deficits back to within EU limits may win more time to meet the target if economic growth slows, European Economic Affairs Commissioner Olli Rehn said Wednesday.

Rehn said in a letter addressed to EU finance ministers that the deficit situation varies greatly across the 27 member states, even if there is a gradual improvement in public finances generally.

The average annual deficit was above 6.0 percent of Gross Domestic Product in 2009-10, he said, but for 2012 it should be "somewhat above 3.0 percent," the EU ceiling.

Because of the variations in states meeting the target, "the Commission applies a differentiated approach to consolidation, taking into account" specific circumstances, Rehn said.

"If growth deteriorates unexpectedly, a country may receive extra time to correct its excessive deficit" as long as it has put in place a programme to correct the public finances, he said.

"Such decisions were taken last year for Spain, Portugal and Greece," Rehn added.

French Finance Minister Pierre Moscovici signalled earlier Wednesday that France might revise is targets for growth of 0.8 percent this year and for reducing the public deficit to less than 3.0 percent.

Saying that the targets were being held for the moment, Moscovici said the situation was difficult and that "if necessary we are able to have another look, to re-examine the different targets" for growth and for reduction of the public deficit.

Nearly all EU member states have had problems sticking to the deficit limit of 3.0 percent, having regularly overspent, especially in efforts to boost their economies at the height of the 2008-09 global financial crisis.

Accordingly, many are under Excessive Deficit Procedures whereby Brussels closely monitors their efforts to correct their public finances and may impose fines or other sanctions if they fail to do so by the date set.