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The national flag of Italy, center left, flies along side the European Union flag from the Palazzo Chigi, the headquarters of the Italian government, in Rome. The European Commission will warn France and Italy's governments that they may face action in March if they do not follow through on written pledges to the EU executive on cutting deficits and making their economies more competitive, according to a European Union official. Close

France and Italy will escape immediate punishment over their 2015 draft budgets when the European Commission announces results of its assessments tomorrow, a European Union official said.

The Brussels-based commission will instead warn the two governments that they may face action in March if they do not follow through on written pledges to the EU executive on cutting deficits and making their economies more competitive, according to the official, who spoke on condition of anonymity. The commission considered moving to sanctions tomorrow and decided against it, the official said.

Under budget-monitoring rules bolstered during the euro-area debt crisis, the commission will publish its formal assessments of draft 2015 budgets from all of the countries using the euro, apart from Greece and Cyprus, which are still subject to conditions under their bailouts.

Earlier this month, the commission decided against rejecting any budget outright, saying that none of the euro-area nations seriously risked breaching EU spending rules, while leaving open the possibility of warning that measures were needed. The decision to put off until March any move toward sanctions is a change to the EUs timetable for such action.

While the EU cannot dictate the contents of a national budget, it can begin a process to impose fines if governments repeatedly flout debt or deficit targets or take insufficient measures to deal with imbalances.

Countries are required to narrow deficits to within 3 percent of gross domestic product and to reduce debt to 60 percent of GDP. They can ultimately face fines of as much as 0.7 percent of GDP if they do not take effective action, after other factors such as growth potential are taken into account.

To contact the reporter on this story: Ian Wishart in Brussels at iwishart@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Jones Hayden

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France, Italy Said to Avoid Immediate Action Over Budgets