EU members ready to embrace public spending plan - by Robert Wielaard
European Union finance ministers worked on a plan Tuesday to pump euro200 billion ($252 billion) into the European Union economy in the next two years to stave off a recession. The ministers were drafting a declaration calling an economic recovery proposal by the European Commission a good basis to stimulate the economy of the 27-country EU, which fell into recession by shrinking 0.2 percent in the third quarter. They welcomed public spending "in the magnitude of 1.5 percent" of the EU gross domestic product but ruled out a cut in sales taxes.Britain — which does not use the euro — has cut its value-added tax charged at the point of sale from 17.5 percent to 15 percent until the end of 2009. But Germany and France opposed that as it could shrink state revenues and in their view do little to encouraging shoppers to spend.The European Commission plans to publish new forecasts for the EU economy on Jan. 19.
The EU's economy commissioner, Joaquin Almunia, is to ask governments for updated details on spending in 2009 to see to what extent they will break EU sound finances rules that limit yearly budget deficits to under 3 percent of GDP.
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