September 28, 2009

EU maps out debt reduction

The European Commission has suggested that its 27-member states expect higher budget deficits in 2010 in order to keep stimulus spending intact.

Considering the fragility of the recovery, no consolidation is advocated on aggregate in 2010, as the planned stimulus measures should still be implemented and government revenues remain subdued, a commission position paper prepared for a ministers meeting later this week reads, the EUobserver reported Monday.

Two days after a Group of 20 summit meeting in Pittsburgh, British Prime Minister Gordon Brown said, as long as we are in recession and as long as there is the need to ensure the economy is strong, he would sustain stimulus measures.

The European Commission expects very substantial debt reduction in 2011, but also said countries should stay the course on debt reduction.

Lackluster growth rates should not be considered as a reason for delaying the exit strategy, the commission said.