Another helping of fudge

According to The Times and other sources, Italy has been given two years to cut its government borrowing to comply with the growth and stability pact. Berlusconi's government was also told to cut the national debt sharply. At 107 per cent of GDP, the debt is the second-highest in Europe.

For the past two years, Rome has also been running budget deficits above the 3 percent GDP ceiling permitted under the pact. Government borrowing is set to reach 3.6 per cent this year and is expected to rise to 4.6 per cent next year.

Joaquin Almunia, the EU monetary affairs commissioner, said: "In view of the current circumstances in Italy, notably the cyclical economic weakness and the size of the required adjustment to bring the deficit below 3 percent, 2007 is a more appropriate deadline."

So, another one gets away with it. After Germany and France got off the hook, though, it would have been very hard for the commission to have taken action against Italy, especially as Berlusconi is being very aggressive about the prospect of action against his country.

However, given that the Italian economy is a basket case, and no reputable economist believes it is going to do anything other than get worse, the idea that it can be brought into line by 2007 is beyond fantasy.

What we have here is another helping of fudge. Produced in such great quantities by the EU, perhaps if they packaged it and sold it on the open market, they could cure everyone's deficit problems.