The governors of the European Central Bank have said they deeply regret the decision by European finance ministers not to punish France and Germany for breaching EU budgetary rules.
In a statement this evening, they said that the two countries' failure to go along with the stability and growth pact carried serious dangers and risked undermining the confidence in public finances across the eurozone.
The decision, which was made in defiance of the European Commission, means that instead of facing heavy fines, the two countries will now only be asked for a political commitment to reduce the deficits.
In recent years, both France and Germany have breached the rule that deficits must be below 3% of Gross Domestic Product.
The agreement has been severely criticised by EU Economic and Monetary Affairs Commissioner, Pedro Solbes, who said that ministers had torn up the rule book. Mr Solbes also refused to rule out the threat of court action to uphold EU law.
However, the Minister for Finance has been defending his decision to back the deal. Mr McCreevy told RTÉ that France and Germany did not owe the ministers anything.
The Italian Economy Minister, Giulio Tremonti, who chaired the meeting, insisted the deal upheld the EU budget rules laid down in the pact.
However, diplomats said Mr Solbes's opposition to the deal was backed by Austria, the Netherlands, Finland and Spain. But the other eight members, including Ireland, commanded enough votes to push it through.
