Tax income has been hit in France and Germany

Are the Germans and the French now going to face stinging fines for breaking the rules?

Don't hold your breath. As originally agreed upon by the EU member states, the Stability and Growth Pact does indeed give the European Commission the right to penalise or fine any eurozone member state whose budget deficit goes above 3% of their GDP.

The idea being that, for the collective good of all members, no individual countries can be allowed to negatively affect the eurozone-wide economy.

Yet while the European Court of Justice has now effectively removed what EU finance ministers thought was their veto, you would still have to bet against fines or sanctions.

Why have they been breaking the terms of the pact?

Recession in Germany and France has meant the income received from taxes by their governments has declined, while their high unemployment has meant greater spending on benefits.

In order to help boost their economies, both governments have decided to cut taxes, defying the European Commission.

They have both claimed they are aiming to reduce their budget deficits to below 3% - but it appears not just yet as both are on line to breach the limit for the third year in a row.

So what is going to happen instead?

Depending upon your point of view, a good old-fashioned compromise, alternately known as a political fudge, is the most likely outcome.

Even before the judgement of the European Court of Justice, the European Commission itself admitted the 3% rule is "too severe".

Its economic affairs commissioner Joaquin Almunia said in June it was "probably necessary" to clarify the definitions of the pact's rulebooks, and that more flexibility was necessary.

A major factor in the European Commission's bringing of the court case was to do with power - the commission simply didn't like the member states' finance ministers thinking they could just step in and block any penalties.

What will be the probable compromise?

The 3% rule being moved upwards, to allow more leeway for budget defaulters is a likely outcome. It is worth noting that Italy and Greece have also been struggling with deficits.

Otherwise, there may be eventual penalties against France and Germany that are more nominal than draconian.

One solution may be a face-saving compromise that allows both sides (the European Commission and the member states) to claim a victory of sorts.

When will this be achieved by?

It is too early to say yet.

However, Dutch Finance Minister Gerrit Zalm, whose country currently holds the EU presidency and will lead any discussions among the member states, said EU finance ministers would discuss the findings of the European Court of Justice at a meeting in the autumn.