The European commission expects the EU's 25 member governments to agree on a significant loosening of the controversial stability and growth pact by spring to kickstart faltering economic growth and create more jobs in the eurozone

The European commission expects the EU's 25 member governments to agree on a significant loosening of the controversial stability and growth pact by spring to kickstart faltering economic growth and create more jobs in the eurozone. Joaquín Almunia, the economic and monetary affairs commissioner, indicated yesterday that reform of the pact, which limits budget deficits to 3% and national debt to 60% of GDP, should be agreed at the March EU summit. The reforms are sought by a large number of troubled governments struggling with low growth and prolonged unemployment but opposed by disciplinarian countries worried that the pact will be rendered even more meaningless after last week's decision to let serial sinners France and Germany off the hook. They could be agreed along with changes to the so-called Lisbon strategy, which aims to make the EU the world's most dynamic knowledge-based economy, overtaking the US in terms of innovation, job-creation and sustainable growth - at a time when the US is growing at 4% and the eurozone at under 2%. Mr Almunia, who is likely to revise down his forecast of 2% growth in the zone in 2005 because of the impact of the soaring euro on exports, said: "I am quite optimistic that we will be able to reach agreement [on pact reform] within the first few months of next year." His comments came as the commission set in train measures to penalise Greece, already found guilty of supplying false deficit figures before it entered the euro in 2002, for overstepping the 3% ceiling with a likely deficit of 5.3% this year and 3.6% in 2005 - with the 2005 figure not yet accounting for the special effect that this year's Olympic Games will have.