The European Commission’s May 29 assessment of the national budgets of the 27 member states will allow three of the EU’s five largest economies to miss the annual 3 per cent budget deficit target, reports the Financial Times.

France, Spain and the Netherlands will be allowed to miss the financial target, while Italy will also be freed from fiscal monitoring plans, despite pledges from new Prime Minister Enrico Letta that he plans to reverse a series of tax rises introduced by predecessor Mario Monti.

The Commission is approving these concessions on condition that national governments introduce labour market reforms. It blames the region’s soaring unemployment levels on the national governments' failure to introduce such reforms.