18/08/2003 11:39
The European Commission in Brussels is set to get tough with Germany if it emerges that its public deficit is likely to exceed EU limits again next year, the EU's commissioner for economic and monetary affairs, Pedro Solbes, said in a newspaper interview published on Monday.
Speaking to the Financial Times Deutschland, Solbes said that if the German public deficit looks likely to be higher than three percent of gross domestic product (GDP) in 2004, the Commission could propose to EU governments at the end of this year that binding budget obligations be imposed on Germany.
"If the German deficit ratio exceeds 3.0 percent in the coming year, we will make a recommendation to the Ecofin council. We're obliged to do so," Solbes told the newspaper.
Under the terms of the European Stability and Growth Pact, euro-zone members are not allowed to run up public deficits in excess of 3.0 percent of GDP on pain of stiff financial penalties.
But Germany was already in breach of that limit in 2002 and expects to remain so again this year.
And if the German government says in its autumn forecast that the deficit ratio will again be higher than 3.0 percent in 2004, the EU Commission could begin to take punitive action before the end of the year, Solbes said.
The commissioner ruled out turning a blind eye to a further breach of the EU's budget rules by Germany if Berlin pushes through its planned package of reforms.
"The council of finance ministers set Germany a very clear task of bringing its public deficit back below 3.0 percent in 2004. We're in favour of structural reforms. But we're still a little concerned by the budget numbers," Solbes said.
Speaking to the Financial Times Deutschland, Solbes said that if the German public deficit looks likely to be higher than three percent of gross domestic product (GDP) in 2004, the Commission could propose to EU governments at the end of this year that binding budget obligations be imposed on Germany.
"If the German deficit ratio exceeds 3.0 percent in the coming year, we will make a recommendation to the Ecofin council. We're obliged to do so," Solbes told the newspaper.
Under the terms of the European Stability and Growth Pact, euro-zone members are not allowed to run up public deficits in excess of 3.0 percent of GDP on pain of stiff financial penalties.
But Germany was already in breach of that limit in 2002 and expects to remain so again this year.
And if the German government says in its autumn forecast that the deficit ratio will again be higher than 3.0 percent in 2004, the EU Commission could begin to take punitive action before the end of the year, Solbes said.
The commissioner ruled out turning a blind eye to a further breach of the EU's budget rules by Germany if Berlin pushes through its planned package of reforms.
"The council of finance ministers set Germany a very clear task of bringing its public deficit back below 3.0 percent in 2004. We're in favour of structural reforms. But we're still a little concerned by the budget numbers," Solbes said.
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