The European Commission said on October 7 2009 that it was warning nine countries about their deficits that were poised to break the permitted three per cent limit. The nine are Austria, Belgium, the Czech Repubic, Germany, Italy, Slovakia, Slovenia, the Netherlands and Portugal.

The EC issued a similar warning to another nine countries earlier, and there are concerns that up to 20 of the 27 members of the bloc could violate the barrier.

The excessive deficit procedure allows the EC to give deadlines to EU countries to correct their budget deficits to bring them into line with allowed levels.
 
The Commission said that the reports adopted on October 7 took due account of the current economic background "and all other relevant factors" and examined whether the deficits planned for 2009 remain close to the reference value and whether the excess is exceptional and temporary.

"The Commission concludes that this is not the case for any of the nine countries."

Economic and Monetary Affairs Commissioner Joaquin Almunia said that most EU member states were set to have budget deficits of more than three per cent of GDP in 2009.

"We need to continue supporting the economy until the recovery takes hold, in line with the European Economic Recovery Plan," he said.
 
"But now is also the moment to design coordinated exit strategies so that, when the moment is right, we can begin to roll back the soaring debt levels."
 
Almunia said that the Stability and Growth Pact was sufficiently flexible to combine the fiscal stimulus in the short term with consolidation of the public finances in the medium term and sustainability in the long term, bearing in mind the costs of ageing.
 
"But it is essential to keep applying it rigorously in order to anchor expectations that the excessive deficits will be corrected in an orderly way," Almunia said.

The EC said that the economic crisis was taking a heavy toll on public finances in the EU and elsewhere because of falling revenues and rising social expenditure on the one hand, and, on the other, the discretionary measures that EU member states have taken under the European Economic Recovery Plan devised by the Commission.

"There is a general consensus among policy-makers, from the Commission - which has been given specific budgetary surveillance tasks by the EU Treaty - to the European Council and the G20, that the budgetary stimulus was necessary to avoid a long and deep recession and that it must be maintained until a durable recovery has been secured," the EC said.

However, governments also had agreed at the highest level that the extraordinary support needed to be withdrawn in a co-ordinated manner when the time is right.
 
At EU level, heads of government also regularly had affirmed that the Stability and Growth Pact remains the cornerstone for ensuring the sustainability of public finances and for anchoring "exit strategies", the EC said.