ECOFIN COUNCIL: PARIS MUST CUT DEFICIT BY AT LEAST 0.5% OF GDP BY 2004.

The anticipated clash between France and its Euro-zone partners finally failed to materialise. Spain and the Netherlands were notably keen to demand that France cut its structural deficit by 0.5% from 2003. Ultimately, the Eurogroup compromise text only requires France to ensure "a bigger deficit cut in 2003 than that envisaged". This formula was only rejected by the Netherlands, and later, within the EcoFin Council, by Denmark. "France has the right and the responsibility to spread its budgetary efforts between 2003 and 2004 to cut its deficit below the threshold of 3% of GDP", said Mr Christodoulakis. The Council recommendation also requires France to "limit debt growth in 2003". However, in this case too, the text does not set any limits. France's Economic Affairs and Finance Minister Francis Mer suggested that all the Member States "have recognised the efforts we have made". He also stipulated that following pledges by France "there is no reason for policy to be dictated to it".

The Netherlands has attached a declaration to the Council minutes pointing out that the Eurogroup meeting in October 2002 stipulated that Member States having failed to achieve a situation close to balance or in surplus were required to cut their structural deficit by at least 0.5% from 2003. Later, according to the text, the Eurogroup agreed that countries running excessive deficits should make an effort above 0.5%. "This agreement was confirmed by the March 2003 European Council", according to Dutch Finance Minister Gerrit Zalm. The Netherlands also recalls that on the launch of the early warning procedure in respect of France in January, the EcoFin Council asked France to cut its structural deficit by 0.5% in 2003. The situation in France has since deteriorated. Mr Zalm also drew attention to the efforts made by Portugal (a 1.5% cut in the structural deficit in a year) and Germany (1% deficit cut in 2003). Given this state of affairs, the Netherlands denounces the "more lenient treatment" of France, a fact that justifies its decision to vote down the...