European finance ministers meeting in Brussels have decided not to issue a formal warning to Germany over its budgetary plans. This will be seen as a setback to the European Commission, which recommended the warning that the country was in danger of breaching spending and borrowing guidelines laid down for the Eurozone members.
A compromise was reached at last night's Ecofin Council meeting. The formal warning will be quietly dropped as long as Germany and Portugal make commitments on strict budgetary policies.
It was exactly one year after Ireland was given a reprimand by the European Council of Finance ministers over worries about inflation.
Although the circumstances are different this time, it seems that Germany is being let off. Ironically, when plans for the single currency were being drawn up, it was Germany who insisted that rules should be laid down to prevent Eurozone members from borrowing or spending too heavily.
