* Commission sets budget deficit targets for 13 countries
* Targets to cut deficits range from 2012 to 2014/2015
* Annual deficit cuts to range from 0.5 to 2 pct/GDP
* German-French fiscal cooperation key for Europe governance
* Slovakia, Ireland pledge to meet deficit targets
(Adds reactions, detail, background)
By Jan Strupczewski
BRUSSELS, Nov 11 (Reuters) - The European Commission on
Wednesday set deadlines between 2012 and 2014/15 for 13 EU
countries to slash budget gaps below 3 percent of GDP and said
it would step up disciplinary budget action against Greece.
The announcement follows agreement by EU finance ministers
on Tuesday to start withdrawing fiscal support to the economy
from 2011 at the latest as the recovery takes a firmer hold.
Economic and Monetary Affairs Commissioner Joaquin Almunia
said cutting the deficits, inflated by the worst economic crisis
since World War Two, was needed to prevent a rise in long-term
interest rates that would raise the debt servicing costs.
"I believe the deadlines proposed today are appropriate and
realistic," Almunia said in a statement.
The Commission expects the aggregate budget deficit in the
the euro zone to jump to 6.4 percent this year and 6.9 percent
next year from 2.0 percent in 2008 -- more than twice the EU
limit of 3 percent of gross domestic product.
This will boost euro zone debt to 78.2 percent of GDP this
year, 84 percent in 2010 and 88.2 percent in 2011 in a trend
that could undermine the value of the shared euro currency.
The Commission, the EU executive, gave Germany, France,
Spain, Austria, the Netherlands, the Czech Republic, Slovakia,
Slovenia and Portugal until 2013 to bring their deficits below
the 3 percent EU limit.
Ireland and Slovakia said they would meet the deadline.
"Slovakia considers the 2013 date...as adequate," the
finance ministry said in a statement.
Germany said on Tuesday it would have deficit below 3
percent in 2013 but France said 2013 would be very difficult and
reducing the shortfall below 3 percent in 2014 would already be
an achievement.
Almunia told a news conference it was very important that
both France and Germany should move together in fiscal policy.
"It is extremely important that Germany and France both
share the same orientations of their fiscal polices," Almunia
told a news conference.
"That is not to say that France should have exactly the same
policies as Germany... but both economies should have coherence
in the respective economic and fiscal strategies, because if
not, economic policy coordination and economic governance in
Europe is impossible," he said.
MORE TIME FOR FRANCE, TOUGHER ACTION FOR GREECE
Italy and Belgium got until 2012, Ireland until 2014 and
Britain until fiscal year 2014/15.
To reach these goals, which have yet to be approved by EU
finance ministers on Dec. 1-2, governments will have to make
deep budget gap cuts every year.
The Commission asked Germany and Italy to cut their deficits
by 0.5 percent -- the EU benchmark. Austria, the Netherlands,
Belgium and Slovenia should cut by 0.75 percent a year while
Slovakia and the Czech Republic by 1 percent.
Portugal and France will have to reduce their shortfalls by
1.25 percent every year, Spain and Britain by 1.75 percent and
Ireland will have to slash the gap by 2 percent annually.
The new deadlines give France, Britain, Ireland and Spain an
extra year for the deficit reductions.
This is because they took effective action to cut deficits
as requested by EU finance ministers in April, but bad economic
conditions made it impossible for them to meet the targets.
Greece did not take action as asked by EU finance ministers,
the Commission said. It proposed raising the EU's disciplinary
budget procedure against Athens to one level before fines.
"No effective action has been adopted," Almunia said. "This
will trigger, if the council (of EU ministers) will endorse our
position next month, in a couple of months new recommendations
under the next step in the excessive deficit procedure."
"The Greek economy and public finances have very serious
problems, have to face very serious challenges," he said.
Almunia has said the Commission will propose a deficit
deadline for Greece in the next two or three months.
"Greece needs strong structural adjustments. Greece needs a
very ambitious and determined fiscal consolidation strategy over
the medium-term and very crucial institution reforms to be able
to deliver structural and fiscal adjustments," he said.
Almunia said the Greek budget overruns were not only a
problem for Greeks, but for the single currency area as a whole,
because the 16 countries in it shared the euro. "It is a
question of common concern for the euro area," he said.
(Additional reporting by Andras Gergely in Dublin and Martin
Santa in Bratislava)
(Reporting by Jan Strupczewski, editing by Timothy
Heritage/Victoria Main)
