| BRUSSELS, Sept 17
BRUSSELS, Sept 17 All European Union countries
under surveillance for exceeding budget deficit limits should be
given an extra year to meet their goals, Bruegel, an influential
think-tank whose proposals often inform EU policy, said in a
paper on Monday.
Extra time would allow the countries to better balance the
need for economic growth with the demands of austerity and so
regain market confidence after almost three years of the
sovereign debt crisis, Bruegel said.
Of the EU's 27 countries, 21 are under what is known as the
excessive deficit procedure, which means they face disciplinary
action and potentially fines if they fail to bring their budget
deficits below 3 percent of gross domestic product in time.
Most have to reach the goal by 2013, while several have a
2012 deadline and others a 2014 or 2015 target.
Among the 17 countries that make up the euro zone, 13 are
under such procedure and two -- Spain and Portugal -- have
already been granted one-year extensions because of their weak
"A one-year extension to the deadline for deficit correction
may be granted in case of negative growth in the EU, or in
specific countries," Bruegel scholars Benedicta Marzinotto and
Andre Sapir wrote in the policy brief.
"For 2012, given the general economic situation, the
one-year extension should be granted to all countries before
they finalise their budgets for 2013," said the paper.
Bruegel, set up in 2005, is widely regarded as the most
influential EU think-tank dealing with economic issues and has
been ranked as the world's third most prominent think-tank.
Its economists and policy experts are frequently invited to
brief EU officials and provide input to policy debates.
In their paper, the Bruegel economists said a decision to
extend the deadline had to be taken promptly.
"Thereafter, it is only important that the decision is taken
earlier than normal, ideally at the beginning of April, and that
it is mostly in the hands of the Commission, as are other steps
in the Excessive Deficit Procedure," they said.
The EU substantially toughened its budget rules late last
year to include swifter financial sanctions against countries
which spend too much. The so-called "six-pack" rules are
designed to prevent another sovereign debt crisis.
But the huge austerity effort across the euro zone, meant to
regain market confidence in public finances, is one of the main
factors behind a sharp economic slowdown across Europe, which is
likely to become a recession later this year.
"The strengthening of the European Union's fiscal rules...
and the parallel worsening of economic conditions in Europe,
re-opened the debate about the relationship between fiscal
discipline and growth," Bruegel said.
"Influential voices have argued against the EU's perceived
obsession with fiscal discipline, which risks being
self-defeating in bad times," it said.