EU economic and monetary affairs commissioner Pedro Solbes said the EU Stability and Growth Pact "is not suspended". The comment came after EU finance ministers early this morning agreed to suspend disciplinary action against Germany and France for breaching the pact's deficit limits. Both countries are set to record budget deficits in excess of EU limits for the third year in a row in 2004, which should have left them open to heavy fines from the European Commission.
"The problem is that we have a political decision which had no legal basis," Solbes said as he entered a meeting of all 15 EU finance ministers. Earlier, Solbes said he "deeply regretted" the EU ministers' decision. Italian Finance Minister Giulio Tremonti said that four countries - Spain, the Netherlands, Austria and Finland - had opposed the agreement. The deal is to be put to all 15 ministers for a formal vote today. Meanwhile, German Finance Minister Hans Eichel said this morning that the pact remains in force. He described the compromise deal for France and Germany as a "very reasonable one". //www.fxcentre.com