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EU gives Spain and France more time to cut deficits

According to a French newspaper the European Commission is thought to be drawing up plans to grant struggling member nations such as Spain and France more time to cut their public deficits below the target of 3% of GDP.

The paper apparently cited key EU officials and European Union sources when it said that France could receive an extra year’s breathing space to narrow its fiscal gap by 2014, whilst Spain could be given as much as an extra two years perhaps even until 2017.

The French government countered the claims saying that it would stick to its deficit cutting goal for 2013 despite the possible softer line from the EU.

“Our public finance path remains unchanged as it was fixed in the autumn,” an aide to Prime Minister Jean-Marc Ayrault said.

The French government’s 2013 budget is based on a 0.8 percent growth forecast for the year – more optimistic than the flat economic output predicted by Brussels and the International Monetary Fund.

Spain’s fiscal targets are to be reassessed in February, EU Economic and Monetary Affairs Commissioner Olli Rehn said last month. No additional austerity efforts are needed until 2014, he added, when more structural reforms are likely to be required.

France does not appear to need additional belt-tightening and may have room for a “softer adjustment”, the commissioner said in an interview with France’s Le Monde newspaper.

Both nations are believed to have taken the action necessary to lower their deficits with both being on course to bring their finances under control over the next few years. According to the Spanish government the nation’s seventeen devolved regions are mostly on course to hit their target of 1.5% of GDP.

With the situation in Europe slowly coming under control and the markets appearing more hopeful for the region’s future 2013 could and I stress could see the beginning of the end for the Euro crisis….I did say could.

Have a very merry Christmas everyone, and thanks for reading!

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