The European Commission will on Friday flesh out ideas for revamping EU budget discipline rules, including a plan to broaden the scope of a get-out clause to take more account of protracted economic slowdowns.
The European Union executive said in June that certain elements of the Stability and Growth Pact, which underpins the euro, had proved too strict and should be reconsidered to increase its effectiveness and credibility.
The admission came after a long-running budget battle with Germany and France, the euro zone's two biggest economies, over deficits that are seen breaking the Pact's cap of 3 per cent of gross domestic product for the third year running in 2004.
The Commission got the ball rolling before its summer recess by sketching out ideas for changing the pact that it was prepared to consider and will go into more detail when it reconvenes on Friday.
EU sources said no final decision was expected this week as months of consensus building with EU capitals lay ahead, starting with talks with EU finance ministers at an informal meeting in The Netherlands on September 10-11th.
"The ideas laid out in June will be elaborated without reaching any concrete conclusions," said one EU source.
European Monetary Affairs Commissioner Mr Joaquin Almunia said earlier this month he will also lead talks on how to react to a recent court ruling on the Stability Pact.
On July 13th, the EU's highest court annulled a decision by the bloc's finance minister to suspend disciplinary action against Germany and France for excessive budget deficits.