EU to warn Greece over deficit

EU to step up warning to Greece over failure to bring down ballooning budget deficit

• On 9:44 am EST, Tuesday November 10, 2009

BRUSSELS (AP) -- Greece faces formal criticism from other EU nations for failing to cut back a ballooning budget deficit, the EU's top economy official Joaquin Almunia warned Tuesday.

Greece last month said its yearly gap between public spending and receipts would double to 12.5 percent of economic output. The new Socialist government has promised "radical changes" to raise more taxes to try to stem the gap.

The country will now miss a 2010 deadline that EU finance ministers gave it to bring the deficit under the 3 percent limit set by EU budget rules. The limit is crucial for the 16 nations that use the euro as it is one of the few ways they can coordinate their economies.

EU Economy Commissioner Joaquin Almunia said he "will take note of the lack of effective action" in reducing the deficit and would prepare a formal warning to the country in January or February. The EU executive will publish its views on the Greek deficit on Wednesday.

Other EU officials are frustrated by Greece's bad bookkeeping.

Dutch Finance Minister Wouter Bos said there was much consternation "that in the space of 21 days the Greek deficit surged from 6 to 12 percent."

This wasn't the first time that Greece violated accounting rules, he said, referring to the hosting of the 2004 Olympic Games and fudged figures for military spending.

EU finance ministers called in a statement Tuesday for "the Greek government to urgently take measures to restore the confidence of the European Union in Greek statistical information" -- such as making the country's statistic office independent from political control.

The European Commission will also report on Greece's statistics problems by the end of 2009 and suggest possible changes.

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