The EU on Wednesday accused its major powers of running away from bulging government deficits, as Greece said it could still seek IMF help if European backing did not ease its debt crisis.
Germany, meanwhile, warned that repeat eurozone offenders deserved expulsion from the bloc.
EU budgetary watchdogs attacked overly “optimistic” growth assumptions masking bloated national budgets, with the UK firmly in the firing line over “uncertainty” in its spending plans.
FALLING SHORT
Britain, France, Germany, Italy and Spain were among the nations likely to fall short of reduction targets, as were most of the 14 EU nations whose fiscal health was under scrutiny, the European Commission said. Its charges against Britain stirred tempers in London, amid frenzied if unofficial general election campaigning.
Germany, accused of having a budget strategy that was “not sufficient to bring the debt ratio back on a downward path,” had earlier raised tensions among the 16 nations in the eurozone.
Daggers are already drawn over the need to craft immediate contingency bailout rules because of financial chaos in Athens and fears for others including Portugal.
German Chancellor Angela Merkel said that Europe needs “a treaty framework in which it would even be possible as a last resort to exclude a country from the euro if it again and again breaks the conditions over the long-term.”
FIRM LINE
A firm EU line toward Greece appeared to be working, with the interest Athens has to pay to borrow falling to close to 6 percent, about a whole point lower than two weeks ago.
However, Greek Prime Minister George Papandreou said he could not rule out an appeal to the IMF, if European backing was insufficient to help it out of its financial woes.
“If we realize that we indeed will be borrowing at extremely high rates ... there are other options,” Papandreou told reporters in Brussels.
“Nothing is excluded,” Papandreou said, having been asked whether seeking recourse to the IMF remained a live threat.
EU finance ministers will study the commission’s recommendations when they meet next month in Madrid.
Speaking in the European parliament just after they were revealed, the IMF’s managing director, France’s Dominique Strauss-Kahn, said that countries should act now.
“Our own advice is that the solution for the rather big public debt that most countries in Europe have to face now, is to try to solve it swiftly,” he said.
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