EU Budget Deadline

Despite the increase in optimism, euro zone finance ministers have provided more time to bring their budgets to balance/surplus, as the 2010 deadline has been moved to 2012, due to the slowdown in economic growth.

The increased flexibility of the deadline is likely to ease tensions between finance ministers and the French premier who argued over the speed of budget deficit cuts, especially in light of their proposed vat reduction on oil in order to tame prices.

Regardless of the current economic environment, the EU and monetary affairs commissioner, Joaquin Almunia, has stipulated that member states should, and need to preserve their budgetary commitments of 2010.

The initial 2010 target for budget balance was set in April 2007, at a period of economic growth where finance ministers decided it was time to take advantage and balance budgets.

Since then, France have been the first to baulk at the difficulty of the task and had indicated that they will need two more years due to restructuring and financing in the form of sustained and managed economic growth. However, the Commission criticised the French budget policy and have asked the French to commit to cutting the deficit at a faster rate.

The 15-member euro zone economy grew by 0.8 percent quarter-on-quarter whilst the broader based 27-member EU has a 0.8-percent first quarter growth rate, propelled by the growth experienced in central and Eastern Europe.

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