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Last Updated: Tuesday, 13 July, 2004, 14:21 GMT 15:21 UK
EU pact decision welcomed
By Alexandra Fouché
BBC News Online, Brussels

Whichever way you look at it, reaction so far has been positive to the landmark ruling made on Tuesday by the European Court of Justice.

Euro banknotes
The ruling on the stability and growth pact went in favour of the EC
The German government welcomed the ruling, saying the judgement gave eurozone governments room for manoeuvre in interpreting the EU's strict set of budget rules.

The decision may seem to be a defeat for the Council of Ministers, theoretically paving the way for heavy fines for France and Germany.

But Germany says the court ruling showed Germany had not broken the rules.

"The court has confirmed that the council (of EU finance ministers) has room for manoeuvre when it applies the stability and growth pact," he said in a statement.

"This makes clear that the council and Germany have not broken the pact," he added.

'Controlled spending'

France said its budgetary policy would not be affected by the ruling, which "does not place France's budget policy orientation in doubt", a spokeswoman for Prime Minister Jean-Pierre Raffarin said.

France's budget policy is already one of "controlled spending", said the spokeswoman.

"Everything is being done" to bring France's public deficit back under the EU limit of 3% of gross domestic product, she added.

French Finance Minister Nicolas Sarkozy said the ruling strengthened his undertaking to bring the country's deficit within the limit in 2005.

"This decision reinforces me in my pledge to take control of public spending in order to cut the deficits, in line with France's European commitments," he said.

"The court's decision is a reminder that shared European constraints must be scrupulously observed by everyone."


The Netherlands, which has just assumed the rotating EU presidency, said it welcomed the clarification brought by the ruling.

The Netherlands, saying it was already discussing the consequences with EU member states, said: "We find it positive and good that the ruling brings clarification."

Whether that will lead to a formal change of regulations and treaties is still to be considered
Dutch Finance Minister Gerrit Zalm
Dutch Finance Minister Gerrit Zalm said European Union finance ministers would discuss ways to "strengthen and clarify" the implementation of the pact after the ECJ's ruling.

Mr Zalm said EU finance ministers would discuss the implications of the court ruling in the autumn.

"Whether that will lead to a formal change of regulations and treaties is still to be considered," Mr Zalm, who is chairing the Ecofin during the Dutch presidency of the EU, told a news conference in The Hague.

'Respect the rules'

European Commission president-designate Jose Manuel Durao Barroso said during hearings in the European Parliament that the implications of the decision would have to be taken into account and rules should be respected.

"We have to study the decision carefully and see how to make it more credible. Rules should be respected, we are a community of law, our union is based on the rule of law. If we agree on some rules, we should respect them.

"I am ready to look at a European level at how we can make that policy more credible without rewriting it, because we are not in a position to rewrite the pact."

He added that measures for growth, better co-ordination and ways of adapting the pact to national conditions needed to be considered.

He was speaking at the first of a series of hearings with the different parliamentary groups before his nomination is put to a confidence vote in the full assembly next week.

'Shot to pieces'

Outgoing European Commission President Romano Prodi also welcomed the decision, saying the court ruling confirmed the "central" role of the EU stability and growth pact.

"The court ruling confirms the Commission's view as to the respective roles of the Commission and the Council and the application of the stability and growth pact, making thereby budgetary policy co-ordination more transparent and more predictable in the future," he told a news conference.

His words were echoed by Transport and Energy Commissioner Loyola de Palacio.

"Of course, very satisfied," she told reporters when asked how she felt about the EU court ruling.

"I think it is very important from an institutional point of view that the court justified our position."

But not everyone was so positive.

"The credibility of the stability pact is pretty much shot to pieces, as there have been abuses left, right and centre. Moreover, it is clear that there will always be a way out of fines," Nick Eisinger, director in Fitch's sovereign ratings group, told Reuters news agency.

The BBC's John Moylan
"France and Germany have, for several years, run into the red"

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