by Dan Alexe The European Commission gave France until 2017 to get its budget deficit below an EU-imposed limit, sparing Paris a fine and giving it a new two-year grace period after it missed a second deadline to puts its finances in order. France already received a two-year extension in 2013 to comply with guidelines intended to make sure no euro country could run up high deficits. It could face fines if it fails to do so. In a related move, the Commission said the "opening of excessive deficit procedures at this stage are not warranted" for Italy and Belgium. Both have failed to meet targets, which could in theory lead to fines. France has repeatedly failed to meet pledges to cut its deficit, arguing against a German push for austerity at a time of high unemployment and struggling under Socialist President Francois Hollande to reduce spending in the face of popular opposition. The decision by the Commission, which also decided against penalising Italy and Belgium for increasing public debts, had been expected after officials had hinted that imposing a fine on such a powerful member state was a step too far. But it raised some questions on the credibility of rules in a euro zone already buffeted by the Greek debt crisis. Economics Commissioner Pierre Moscovici, who was France's finance minister until less than a year ago, said Paris had begun reforms and would be given more time to meet EU rules. In its documentation, the Commission did not give a detailed explanation of its decision, saying only that steps taken by France to bring down the deficit over the last two years were in the right direction, albeit not enough "in the current context". EU finance ministers asked Paris in 2013, when they granted the previous two-year extension, to cut its structural deficit -- a measure that excludes effects of the business cycle and one-off items -- by 0.8 % of GDP in both 2014 and 2015. France has said last year the structural cut in 2014 was 0.1 % and for 2015 it planned 0.3 %. After pressure from the Commission it offered a cut of 0.5 % this year. Because disciplinary steps against Paris are already advanced, missing the deadline and adjustment targets could have meant a fine of up to 4 billion euros. But none came on Wednesday. Instead, the Commission will recommend to EU leaders at their next summit in March that they accept a 0.5-percent structural deficit cut this year and ask Paris to present a major new reform plan in April. "France has already announced several reforms in the past few days. These are steps in the right direction," Moscovici said. "This should be built upon and so we expect France to present an ambitious and more detailed national reform programme in April." The Commission will review if Paris is indeed meeting the promised structural deficit adjustment in May and, were it to not deliver again, it could again face a fine. The decision is bad for the credibility of EU budget rules, which were sharpened over the last three years to prevent overspending and a future sovereign debt crisis. Nevertheless, the decision could have a political side effect in France. 2017 will be the year of the presidential election in France, and if sanctions were to be initiated then against France, that would boost the Eurosceptic parties, such as the Front National. That is the reason why the French Commissioner Pierre Moscovici had, in vain, tried to obtain a three year delay for France.
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