In its first budgetary review of the 10 countries that joined the EU this month, the European Commission said six were above the deficit ceiling of three per cent of gross domestic product: Cyprus, the Czech Republic, Hungary, Malta, Poland and Slovakia.

They ranged from 3.6 percent in Slovakia to almost 13 percent in the Czech Republic, said EU Economic and Monetary Affairs Commissioner Joaquin Almunia.

Three others – Slovenia, Latvia and Lithuania – were under three per cent and Estonia had a surplus, he said.

All 10 are committed to joining the Euro single currency as soon as they meet the criteria, with the earliest expected in 2007.

Although the fiscal discipline rules adopted ahead of the Euro usually give budget sinners only one year to come back in line, Almunia said “it could be appropriate to allow for a multi-annual adjustment period” in the case of the six new countries facing difficulties.

Although the commission has been fighting old EU members Germany and France – so far with little success – over their persistent budget violations, Almunia noted the new countries would not be subject to the most severe sanctions because they were not yet using the Euro. In addition, “the high level of the deficit upon accession, and the structural shifts in the economy following accession, could be a relevant factor” supporting leniency, he said.