European Euro and Social Dialogue Commissioner Valdis Dombrovskis addresses a news conference at the EU Commission headquarters in Brussels Feb. 25.Francois Lenoir/Reuters
France will avoid punishment for missing its budget deficit targets after the European Union gave it two more years to come into line.
European Commission Vice-President Valdis Dombrovskis said Wednesday that France now has a 2017 deadline to get its budget deficit equal to or below 3 per cent of annual gross domestic product.
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.
Despite the respite, Dombrovskis said "it's clear that France needs to step up its efforts."
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.
French Finance Minister Michel Sapin said 2017 "is exactly the target that the government has set itself."
He said low interest rates and oil prices have created a "positive economic environment" that is likely to help France overcome its current difficulties.
The EU's executive Commission supervises the budgets of EU nations and it made the announcements Wednesday as part of an annual process for monitoring the fiscal policies of member countries.
It plans to make new recommendations to France in coming days for dealing with its excessive deficit over the next two years, including strict milestones for implementing them which would be assessed regularly from May.
Brussels warned that action is needed to avoid the risks of adverse effects on the French economy and, because it is a major European powerhouse, on the rest of the EU.