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France, Germany 'should be fined'
MILAN, Italy (Reuters) -- France and Germany should be fined if they cannot bring their 2004 budget deficits under the EU's limit of three percent of gross domestic product, EU Competition Commissioner Mario Monti said in an interview on Friday.
Monti, speaking to Italian business daily Il Sole 24 Ore, said sanctions on the EU's two largest economies, in accordance with provisions outlined in the bloc's Stability and Growth Pact, would not weigh on European growth.
"When there are rules, they must be applied correctly and equally to all, to big countries and little countries,'' Monti was quoted as saying. "If the objective conditions are there...sanctions will be triggered.''
Germany told the EU last week it expected its 2003 budget deficit would reach 3.8 percent of GDP after 3.5 percent in 2002, although many private forecasters expect the deficit to exceed four percent this year.
France has already said it expects to break the stability pact's limit on deficits of three percent of GDP for the second year running this year, and on Tuesday raised the prospect of busting the limit again in 2004.
Monti said sanctions would be a strong signal to European countries, both inside and outside the budget deficit cap.
"(Sanctions) would not have a heavy financial effect, so they would not slow growth,'' Monti said. "It would maintain confidence in the euro without having a recessionary backlash on the economy.''
Monti added Italy's attempts to overhaul its pension system could help it encourage economic growth by removing a "sword of Damocles'' from over the heads of workers and pensioners.
"This should remove a brake on consumption,'' he said, but added sufficient competition was still lacking in Italy.
"It seems to me that Italian life is characterised by great bitterness in the relations between political parties, taking attention away from the things considered necessary, this is to say the creation of a system capable of carrying forward new initiatives.''
MILAN, Italy (Reuters) -- France and Germany should be fined if they cannot bring their 2004 budget deficits under the EU's limit of three percent of gross domestic product, EU Competition Commissioner Mario Monti said in an interview on Friday.
Monti, speaking to Italian business daily Il Sole 24 Ore, said sanctions on the EU's two largest economies, in accordance with provisions outlined in the bloc's Stability and Growth Pact, would not weigh on European growth.
"When there are rules, they must be applied correctly and equally to all, to big countries and little countries,'' Monti was quoted as saying. "If the objective conditions are there...sanctions will be triggered.''
Germany told the EU last week it expected its 2003 budget deficit would reach 3.8 percent of GDP after 3.5 percent in 2002, although many private forecasters expect the deficit to exceed four percent this year.
France has already said it expects to break the stability pact's limit on deficits of three percent of GDP for the second year running this year, and on Tuesday raised the prospect of busting the limit again in 2004.
Monti said sanctions would be a strong signal to European countries, both inside and outside the budget deficit cap.
"(Sanctions) would not have a heavy financial effect, so they would not slow growth,'' Monti said. "It would maintain confidence in the euro without having a recessionary backlash on the economy.''
Monti added Italy's attempts to overhaul its pension system could help it encourage economic growth by removing a "sword of Damocles'' from over the heads of workers and pensioners.
"This should remove a brake on consumption,'' he said, but added sufficient competition was still lacking in Italy.
"It seems to me that Italian life is characterised by great bitterness in the relations between political parties, taking attention away from the things considered necessary, this is to say the creation of a system capable of carrying forward new initiatives.''
Wow, first Berlusconi and now this guy. Italy is turning out some very intelligent statesmen.
Godspeed, Mario Monti! All those who believe in fairness and justice stand behind you.
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