German budget deficit will exceed forecasts: EU
4 November 2005, BRUSSELS - Germany's budget deficit in 2005 could be higher than government forecasts of 3.7 per cent of Gross Domestic Product (GDP), the European Commission warned Friday.
4 November 2005
BRUSSELS - Germany's budget deficit in 2005 could be higher than government forecasts of 3.7 per cent of Gross Domestic Product (GDP), the European Commission warned Friday.
European monetary affairs chief Joaquin Almunia told reporters he expected to issue Berlin with another warning on its excessively high 2005 budget deficit this month.
E.U. finance ministers will discuss the Commission's economic recommendations for Germany in December, Almunia said, adding that Berlin would be handed formal proposals for a new economic "adjustment path" during the first six months of 2006.
Almunia said he had warned Germany's incoming finance minister Peer Steinbrueck in Berlin this week that the Commission expected the German budget deficit in 2005 to be "even higher" than 3.7 per cent of GDP forecast by the country's authorities.
"I found the new government in Germany concerned by the seriousness of the fiscal situation and committed to adjust public finances," he said.
"I was happy to listen to this commitment," he added.
This is the fourth successive year that Berlin will be in breach of eurozone fiscal rules which set a 3 per cent of GDP ceiling for national budget deficits. Many analysts predict a further overshoot next year.
The 3 per cent of GDP rule has also been broken by France, Italy and several other key eurozone economies.
Designated German chancellor Angela Merkel has vowed to cut spending and meet the eurozone's budget deficit rule by 2007 under a grand coalition accord which will be presented on time next week.
Merkel said her government would make 35 billion euros (42 billion dollars) of spending cuts in the coming months. But she said there was still no agreement on exactly where the cuts would be made.
Merkel's Christian Democratic alliance (CDU/CSU) is negotiating to set up a grand coalition government with outgoing Chancellor Gerhard Schroeder's Social Democrats after narrowly winning Germany's September 18 general election.
Subject: German news