Revised European Union budget deficit rules are working well and have not caused any budgetary weakness since deficits are generally falling, Eurogroup chairman Jean-Claude Juncker was quoted on Saturday as saying.
EU budget deficit rules, called the Stability and Growth Pact, were changed last year to give countries running shortfalls above the EU's ceiling of 3 percent of gross domestic product more leeway in getting public finances back in order.
"Contrary to what certain people had believed ... the Pact, as it was revised in March 2005, has not led to budgets getting out of hand and not even to any loosening of budgetary discipline," the Belgian daily L'Echo quoted Juncker as saying.
"The global level of deficits is in the process of shrinking," he said. Juncker, who is Luxembourg's prime minister, chairs the monthly meetings of finance ministers of the 12 countries that use the euro currency.
The Pact's rules are designed to underpin the single EU currency, the euro, by putting caps on governments' borrowing.
Its reform was triggered in November 2003 by Germany and France, which blocked a European Commission proposal to step up disciplinary action against their excessive deficits.
Not only were the revised rules working properly, there was now broad agreement among the eurozone's finance ministers on the best way to deal with budgetary surpluses, Juncker said.
"... There is a consensus among all (Eurogroup) members ... on the circumstances (where) we should allocate revenue surpluses ... to reducing deficits and debt, and try to avoid pouring this surplus into public consumer spending," he said.
"This consensus did not exist before the reform."
On eurozone growth, Juncker echoed remarks made this week by European Economic and Monetary Affairs Commissioner Joaquin Almunia, who said growth should hold at potential - or slightly above potential - growth in the third and fourth quarters.
But certain risks envisaged next year might lead to a slowdown, he warned, without going into detail. "If we have witnessed a recovery in growth over the last 12 months, then we anticipate that this will be less good in 2007 due to the existence of a certain number of risks which, if they come about, will have a negative impact on growth," he said. "What is more, a growth potential of 2.5 percent seems insufficient to me to allow the zone's member countries to prepare themselves satisfactorily for future challenges, notably demographic aging," Juncker said.
"I state simply that we have reached a point where the zone's economic growth corresponds to the growth potential."