Commission assesses the stability and convergence programmes of Spain, Cyprus, Latvia, Lithuania, Slovenia and the United Kingdom

Having examined their respective updated multi-annual stability and convergence programmes, the European Commission concludes that Spain fully meets the requirements of having a budget close to balance or at surplus as set in the Stability and Growth Pact, but should embrace pension reform more vigorously to address the costs of an ageing population. Outside the euro zone, Cyprus is on track to correct its excessive deficit by 2005 as recommended by the Council, whereas Latvia deserves praise for having lowered its deficit targets compared to the May 2004 programme. Lithuania is called upon to make further progress towards a budgetary position of close-to-balance and to allocate higher-than-budgeted revenues and unspent expenditure this end. Slovenia is also urged to seize every opportunity to accelerate the reduction of its deficit and to improve the long-term sustainability of its public finances. Finally, the Commission encourages the UK to maintain its deficit below 3% of GDP in the current financial year and to aim for a close-to-balance position in the medium term. The Commission’s recommendations on these six programmes as well as on the updated convergence programme of Hungary also assessed today (see IP/05/184) will be on the agenda of the European Union finance ministers’ meeting on 8 March. “Achieving and maintaining national budgets close to balance or in surplus in the medium term is one of the key aspects of the Stability and Growth Pact which must be revived and strengthened. This is a good principle which will allow for a safety margin against running excessive deficits in bad times,” said Economic and Monetary Affairs Commissioner Joaquнn Almunia.