German deficit to hit EU targets this year: source

11th April 2011, Comments 0 comments

Germany's public deficit will be below the EU's three-percent ceiling in 2011, two years earlier than demanded, a source in Berlin said Monday, as Europe's top economy enjoys a solid recovery.

The deficit should be 2.5 percent of gross domestic product (GDP) this year, dropping further to 1.5 percent, 1.0 percent, then 0.5 percent in subsequent years, according to new government figures.

The projections "should be adopted in cabinet on Wednesday and then sent immediately to Brussels," the source said.

Germany saw its deficit jump to 3.3 percent of GDP in 2010 as it implemented a huge stimulus package to battle the worst recession in more than six decades.

EU authorities gave Berlin until 2013 to get its finances back in order.

"We are making progress in terms of our economic growth, which is more balanced with greater domestic demand, but also in terms of our deficit," the source said.

The deficit calculations are based on a growth forecast of around 2.0 percent in 2012 and 1.5 percent in subsequent years, which the source described as "cautious."

On Thursday, the government is expected to revise its official growth forecast up from the present level of 2.3 percent.

While breaching the EU three percent level, Germany has exceptionally strong finances compared with most other EU members who are under increasing pressure to follow Berlin's example and put their public finances in order.

© 2011 AFP

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