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France, Spain get more time to trim debt

A NUMBER of EU member states including France, Spain and Slovenia have been given longer to reduce their deficits by the European Commission, signalling a softening of the stance on austerity.

Commission President Jose Manuel Barroso said the time had come to step up fundamental economic reforms that would deliver growth and jobs.

The country specific recommendations were published for each member state, excluding those in bailout programmes such as Ireland.

"This is the only way to address the two lasting legacies of this crisis – the serious loss of competitiveness in many of our Member States, and persistent unemployment, with all its social consequences," Mr Barroso said.

"The recommendations issued by the Commission are part of our comprehensive strategy to move Europe beyond the crisis. They are concrete, realistic, and adapted to the situation of each of our Member States."

The recession in the 17-strong eurozone has lasted for six straight quarters, with questions being raised about the merits of continuing with the policy of austerity.

The commission forecasts that the euro economy will shrink 0.4pc this year, with declines of 4.2pc in Greece, where the crisis started, and 8.7pc in Cyprus.

European Union rules cap deficits at 3pc of the entire value of each member state's economy, with Ireland given until 2015 to meet its target. It previously received an extension of a year.

France was supposed to have met the target this year, but has been given until 2015, while Spain, which should have achieved it next year, was given until 2016 and Slovenia must now meet it in 2015. Portugal also got an extra year, until 2015, while the Netherlands also got an extra year.

The commission relaxed the pressure on Italy, which was right at the limit last year, to further shrink the deficit.

The Commission said most member states are making progress on fiscal consolidation and are implementing reforms to increase competitiveness.

But it added the pace varies.

"Some Member States need to accelerate reforms or to implement them with greater urgency," it said.

Irish Independent