Solbes warns Germany after budget admission
Wednesday, 16 October 2002The European Commission says it will launch a formal procedure against Germany if the country's public deficit breaches a limit of 3% of gross domestic product this year.
The commission statement by European Economic and Monetary Affairs Commissioner Pedro Solbes came only hours after German Finance Minister Hans Eichel revealed that his country would exceed this year the 3% ceiling which is set out in the EU's Stability and Growth Pact.
But Solbes praised the budgetary strategy of the new German government for having sent a clear signal of its commitment to the stability pact.
He said that Germany was planning decisive steps to improve the country's budgetary situation in 2003 and 2004.
Earlier, the new German government joined France in urging the European Central Bank to give the ailing euro zone economy a boost by cutting interest rates.
In a coalition agreement signed three weeks after winning last month's general election, the Social Democrat and Green parties insisted they would abide by terms of the Stability and Growth Pact, which imposes the 3% limit.
But they said this needed to be complemented at a European level 'with monetary policy that leads to more investment and therefore to more growth'.
