Germany to meet EU deficit target a year early: report

15th July 2010, Comments 0 comments

Germany, Europe's top economy, will reduce its deficit to below the European Union ceiling one year earlier than expected, the business daily Handelsblatt reported on Thursday, citing government sources.

Germany's deficit is set to be 4.5 percent of gross domestic product (GDP) this year, dropping to four percent of GDP in 2011 and three percent of GDP in 2012, the paper said.

The EU's Stability and Growth Pact requires member states to keep their public deficits below three percent of GDP and to work towards a balance in times of economic growth, but the rules have been flouted in recent years as countries have boosted spending to combat recession.

Berlin had promised Brussels it would slash its deficit to below the three-percent ceiling by 2013.

The European Commission has proposed that countries breaking the rules should forfeit cash handouts from Brussels.

To reduce Germany's deficit mountain, Chancellor Angela Merkel has laid out a savings package worth more than 80 billion euros (102 billion dollars).

The austerity measures came under fire from some quarters -- notably the White House -- as it was feared that too strict a savings package could throttle a recovery before it had really taken off.

© 2010 AFP

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