Europe's economic policymakers need to recognise that the recovery has not yet arrived. There has been much talk of a US-led upturn, but while confidence is improving in Europe, there is still no real evidence of a sustained pick-up in growth.
Yesterday it emerged that the International Monetary Fund had cut its growth for the euro zone economies this year from 1.1 per cent to 0.7 per cent, with a limited recovery to 1.9 per cent expected next year. Meanwhile the focus in Brussels is on discussions between the French government and the EU Commission on the size of the French budget deficit and on predictions that Germany may also exceed EU borrowing rules next year for the third year in a row.
Against a background of very sluggish economic conditions, trying to force the euro zone's biggest economies into spending cutbacks or higher taxes - and threatening them with punitive fines if they do not comply - risk damaging confidence. Yet that seemed to be the focus in France's discussions with the EU Commission yesterday.
France's deficit looks set to breach the 3 per cent of Gross Domestic Product ceiling next year for the third year in a row - and Germany is in the same position. The Stability and Growth Pact, which sets down budget policy rules for the euro, says that this should lead to fines on both countries.
The pact, however, is urgently in need of an overhaul. It is understandable that many of the other euro zone countries should have little patience with France and Germany who were, after all, key architects of the pact. However, it is clear that confidence in the German and French economies is fragile. True, there have been some signs of a gradual improvement in confidence, but a pick-up in real economic indicators is still not evident.
Budgetary guidelines are vital for the single currency area. However, they must be sensible and enforceable. The rules as currently constructed are too inflexible. They do not, for example, take account of a country's debt level, or distinguish between current and capital spending. Germany and France do need to return their budgets to sustainable positions. But this needs to be done within a framework which takes account of the current risks to economic growth - and which tackles the big longer-term issues, particularly pensions reform.
The danger in not reforming the pact is that it loses credibility. Germany and France, for example, have both in recent months embarked on programmes of reform to improve the efficiency of their economies. Part of these include tax reforms designed to spur growth, but which will in the short term increase borrowing.
Provided promises to reform pensions and control spending are also acted on, it does not seem sensible for Brussels to seek to punish the big euro zone members for implementing precisely the kind of economic reforms which are required to underpin long-term economic growth.