EU Gives France Leeway as It Reprimands Belgium

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The European Commission (EC) has confirmed that France, Poland, Slovenia and Spain will get two year extensions to meet budget deficit targets, even as it added that spending cuts in France are "crucial" as unemployment is a continuing source of concern.

The Commission said granting France two additional years would be consistent with headline deficit targets of 3.9 percent of GDP for 2013, 3.6 percent for 2014 and 2.8 percent for 2015.

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The EC did however urge France to reduce its pace of public spending in order to tackle structural deficit problems and simplify its tax system, reinforcing calls from ratings agency Standard & Poor's and the French central bank governor on Tuesday.

"Given the high and still increasing debt and the fact that the deadline to correct the excessive deficit is postponed again, [to 2015], it is all the more important that the 2013 budget is strictly implemented and substantial consolidation efforts are firmly pursued in subsequent years," the Commission said.

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"In particular, it is crucial that France's public spending grows significantly less rapidly than potential GDP as improvements in the structural deficit have so far been mainly revenue based. The pension system will still face large deficits by 2020 and new policy measures are urgently needed to remedy this situation."

The Brussels based commission also reprimanded Belgium, which feared it would become the first euro zone country to be fined for failing to cut spending and increase taxation to reduce its deficit.

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The Commission told Belgium it had to cut its budget deficit to 2.7 percent by the end of this year.

"The Commission has recommended that the Council decides that no effective action has been taken by Belgium to put an end to the excessive deficit and that the Council gives notice to Belgium to take measures to correct the excessive deficit."

—By CNBC's Jenny Cosgrave; Follow her on Twitter @jenny_cosgrave.