June 2 - The EU Commission says France needs to stick to its planned reforms in order to bring down its budget deficit, urges Italy to make structural efforts to bring its deficit down, and ends disciplinary budget action against six European Union countries. Ciara Sutton reports
Out of the dog house - the European Commission ends its disciplinary budget action against six EU countries. Austria, Belgium, Denmark, the Netherlands, Slovakia and the Czech Republic now have deficits of less than 3% and no longer risk being fined. Commission President Jose Manuel Barroso. (SOUNDBITE) COMMISSION PRESIDENT JOSE MANUEL BARROSO "The positive results for this European wide strategy for reform is becoming evident. Growth has returned. Employment is set to rise from this year onwards." But there are thorns among the roses. France has been warned to stick to its reforms. It must bring its deficit down below the magic 3% mark by next year. Italy appears to be in a stronger position than France. Prime Minister Matteo Renzi's party won a landslide victory in the European election. That brought Italian borrowing costs down to record lows. But it still has the second biggest debt pile in Europe at 135 percent of GDP. Commission Vice President Olli Rehn. (SOUNDBITE) (English) EUROPEAN COMMISSION VICE PRESIDENT, OLLI REHN, SAYING: "Italy needs to make an adequate structural effort so as to tackle the very high public debt given that this is the main source of vulnerability for the country and a major burden on its growth, and the prospects of job creates." Manufacturing data also revealed a mixed bag for Europe. UK factory output continued to expand in May. But on the continent it was less positive, with Germany and France slowing. Either way Alpari's James Hughes thinks some may not take the Commission's advice. (SOUNDBITE) (English) JAMES HUGHES, SENIOR MARKET ANALYST, ALPARI:. "90 percent of the time, no one listens. Or what happens is the guidelines are put in place and when we get to a point where we're looking at what those guidelines are and whether any of these economies have actually focussed on them, they haven't met them and the goal posts are moved." The EU faces its own issues too - who should be the next European Commission president for one. Now nearly a third of the seats in Parliament are held by extremist parties - there are no certainies any more.