Proposed government measures aimed at reducing Greece’s budget deficit to below the EU ceiling by next year fall short of what is required, according to an economic forecast published by the European Commission yesterday. In his recent 2005 draft budget, Finance and Economy Minister Giorgos Alogoskoufis stated that the deficit would be reduced to 2.8 percent of gross domestic product (GDP) by the end of next year, from a projected 5.3 percent for 2004. The limit set by the eurozone’s Stability and Growth Pact is 3 percent. However, the Commission has questioned this goal, a reduction by nearly half, as being «based on a rather optimistic scenario.» EU officials say that the Greek government has not proposed a tightening of fiscal policy in its draft budget and is mostly relying on a rise in revenue, particularly from social security contributions, and the ending of payments for Olympic projects. The report says that a 1.9-percentage point fall in the public deficit, to 3.6 percent of GDP, by the end of 2005 is more realistic. EU officials recognized one-off spending on the Olympics and national elections during 2004 as factors exacerbating the deficit, but said the rises «clearly point to a lack of control over primary spending» such as wages and pensions. Greece is not alone among EU member states facing deficit problems. The Commission’s report said that France, Germany, Italy and Portugal would also breach eurozone budget rules next year unless they took corrective action. The Commission also rejected Alogoskoufis’s claim that growth would reach 3.9 percent next year. The report said that the government was seeking to implement «significant but likely insufficient budgetary adjustments» and that growth for both 2005 and 2006 would only reach 3.3 percent – still above the projected EU average of 2.3 percent for next year. The unemployment rate within the Union is expected to hover around 9 percent this year and next. Figures published on Monday put the Greek unemployment rate at 11.2 percent. PASOK spokesman Nikos Athanassakis said the Commission’s report showed that the government’s draft budget was unrealistic. Economic and Monetary Affairs Commissioner Joaquin Almunia said that the Commission could give a fuller judgment on Greece’s plans to reduce its deficit when specific plans are submitted by the government on November 5.