Commission: Public finances undermined by ongoing economic crisis

An ongoing economic crisis is hitting the public finances of EU member-states, the European Commission said in a report published on Monday.
The report stressed that sustainability of public debt remained the main challenge in Europe.
The EU executive said that ensuring the viability of public finances was a precondition for economic growth and creating sustainable job positions in Europe, given the fact that member-states’ debt remained at high levels and will continue rising. The Commission insisted on the need of gradual fiscal consolidation, while for member-states hit by market pressures, it underlined that they must continue efforts to achieve fiscal targets and to adopt additional measures if necessary.
Referring to Greece, the report said that after a dynamic start of a reform program in May 2010, Greek efforts slowed by the end of last year and in early 2011. The Commission reiterated that inadequate political consensus over the need to reform has affected implementation of the program. The report is based on the Commission’s spring estimates which have not taken into account new measures announced by the Greek government. According the report, the fiscal deficit will end at 9.5 pct of GDP this year and to 9.3 pct in 2012.
The Commission will publish its autumn forecasts in the coming weeks.

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