EU Says Swelling Debt Poses Risk

AOIFE WHITE

BRUSSELS (AP) — The EU warned Wednesday that eurozone governments who make no effort to curb debt and deficit to agreed limits are posing a risk to the wider 16-nation currency area.

EU Economy Commissioner Joaquin Almunia singled out Greece's "serious problems" with its rapidly worsening economy and public finances, saying they were "also a question of common concern for the whole euro area."

Governments have spent billions of euros (dollars) to rescue banks and lift their economies out of the worst downturn since World War II. As a result, most euro nations are flouting strict EU budget rules designed to coordinate their economies and keep their currency stable.

The EU executive is now pushing them to plan cuts to mounting debt and widening yearly budget gaps. On Wednesday, it set deadlines for when 14 nations should aim to meet a deficit limit of 3 percent of gross domestic product. EU nations must jointly agree to these timetables.

But France, the second largest euro member after Germany, is already warning that it won't make the new 2013 deadline as its deficit heads for a record 8.5 percent next year.