The ECJ has overturned the Council decision of November 2003 to suspend proceedings against Germany and France for their excessive budget deficits in 2003. The Commission is considering what action to take.

By November 2003, it had become clear that Germany and France were running budget deficits in excess of the 3% of GDP allowed under the Maastricht treaty - in Germany's case for the second year in succession. The European Commission proposed to the Council of Ministers in advance of the November 25 "ECOFIN" meeting that they pass a formal resolution threatening both countries with penalties unless they reduced their deficits by at least 0,8% of GDP in 2004 and brought them below the 3% level altogether by 2005. However, "ECOFIN" did not find a majority for this proposal, but did pass a somewhat weaker resolution "welcoming the public commitment" by the two countries to "take all necessary steps" to ensure that the deficit would be below 3% of GDP in 2005. The resolution went on with a number of concrete suggestions to each country and concluded with an item suspending the excessive deficit proceedings pending the results of compliance. The European Commission claimed that the Council was not authorised to pass such a resolution and sued before the ECJ for its annulment. The Court has now found in the Commission's favour, at least in so far as the Council decision to suspend the proceedings was concerned. On paper, this re-establishes the legal position obtaining on November 24, 2003, but the practical implications of this for Germany in July of 2004 after the last parliamentary sitting before the summer recess (the Bundestag does not reconvene until September 6) are not entirely clear. The Commission has announced that it "will study very carefully the full decision of the Court before making more detailed comments or proceeding in any other action".

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