Baltische landen en Slovenië klaar voor de euro, overige nieuwe lidstaten hebben te groot begrotingstekort (en)

EUOBSERVER / BRUSSELS -Many of the EU's new members will have to make billions in savings in order to join the euro, according to figures published yesterday (16 March).

According to a report released by the European Commission some new members will need to more than halve their budget deficits before they can join the single currency.

Euro rules mean that budget deficits - which is the amount of money the government takes in tax minus the amount it spends - must be lower than three percent of GDP.

But yesterday's figures show that six out of ten new member states would have to take drastic measures to bring their deficits down below that ceiling.

The deficit in the Czech Republic is 12.9 percent, while Hungary, Cyprus and Malta are also deeply in the red with deficits of 5.9, 6.3 and 9.7 percent respectively.

This means that Prague would have to reduce its deficit by approximately seven billion euro before it can apply to join the single currency, assuming growth remains roughly constant.

The Baltic states - Estonia, Lithuania and Latvia - along with Slovenia have sufficiently healthy finances to join the euro as soon as possible but the others will either have to cut public spending or raise taxes to bring the deficits down to acceptable levels.

UK enters Brussels bad books

The situation is scarcely better in the current EU 15.

Brussels announced yesterday that the UK would, for the first time, have a deficit over three percent, so joining France and Germany in breach of the euro rules.

As Britain is not a member of the euro zone, it is not subject to the rules but is still expected to adhere to them and can expect to receive some harsh words from the European Commission.

Paris and Berlin will be disappointed with their figures (4.1 and 3.9 percent respectively) as they cast doubt on their ability to get below the ceiling in 2005 as they have promised.

The Netherlands - one of the main supporters of the euro rules - also moved up to three percent.

And overall, the deficit for the whole euro zone was 2.7 percent, an indication of slow economic growth.