Budget row: EU asks France for more details

French President Francois Hollande said his country had received an EU Commission letter asking for clarifications over its 2015 budget, which forecasts that France will miss the deficit targets laid by Brussels by a wide margin.

Budget row: EU asks France for more details
Hollande and his PM Manuel Valls will have to convince Brussels their 2015 budget is in order. Photo: AFP

The EU, which wants a reply by the end of the week, also wrote to Italy, which infuriated Prime Minister Matte Renzi, who reacted by making the letter public.

The dialogue with Brussels continues "in very good conditions", he said, stressing France's commitment to EU budgetary rules but "with the maximum flexibility".

French officials said that there was no intention to publicise the details of the "a private letter" adding that the contents were "banal" and "of little significance".

France's budget forecast shows a 4.3 percent GDP deficit in 2015, far above the required three percent.

Last week, member states which use the euro currency submitted their spending plans for next year to the Commission, which won vast new powers of oversight from member states at the height of the eurozone debt crisis.

The Commission has so far refused to confirm or deny that France and Italy, along with Austria, Slovenia, Malta and Finland have all been notified that their submissions are problematic.

In Italy's case, the budget squarely misses structural reform commitments, even though it forecasts a deficit well within the EU's three percent of output ceiling.

Italy's PM Renzi, attending an EU summit in Brussels, responded to the letter with a promise to shed light on Brussels' own spending.

"We will publish data on everything that is spent by these palaces. We're going to have some fun," he said on the margins of the summit.

He added that he was surprised at Barroso's response to the publication of the EU letter, as the details had already published by the Financial Times and an Italian daily.

"The Italian budget poses no problems," he insisted.

Hours before the EU summit, the Italian finance ministry released a letter from the EU's Economic Affairs Commissioner Jyrki Katainen, marked "strictly confidential", drawing the fury of Barroso.

The Commission has until Wednesday to decide whether Italy and the other countries are in "serious" breach of the rules, and the letter was the official warning that it may do so.

But admonishing France and Italy, the second and third-biggest eurozone economies, and formally demanding a change to their budget would be a huge political risk.

The fallout in France, with soaring unemployment and a stagnant economy, is especially a worry with the anti-EU far right becoming a dominant force.

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