EU reprimands Germany and eight others for excessive deficits
Brussels - Officials in Brussels piled pressure on European Union governments to put their public accounts in order Wednesday by initiating excessive deficit procedures against Germany and eight other member states.
According to the European Commission's latest estimates, the budget deficits of Austria, Belgium, Czech Republic, Germany, Italy, the Netherlands, Portugal, Slovakia and Slovenia are all expected to violate the EU's Stability and Growth pact, which states that deficits should not exceed 3 per cent of a country's gross domestic product.
While acknowledging that governments had increased their public spending to mitigate the impact of the economic crisis, the commission concluded that the countries' excessive deficits were neither "exceptional" nor "temporary".
The commission has already initiated similar procedures against a further nine EU countries, including France and Spain, whose budget deficits exceeded the limit already in 2008.
"A large majority of EU Member States are set to have budget deficits above 3 per cent of GDP in 2009 as a result of the economic crisis. We need to continue supporting the economy until the recovery takes hold, in line with the European Economic Recovery Plan," said Economic and Monetary Affairs Commissioner Joaquin Almunia.
"But now is also the moment to design coordinated exit strategies so that, when the moment is right, we can begin to roll back the soaring debt levels," Almunia said. "It is essential to keep applying (the pact) rigorously in order to anchor expectations that the excessive deficits will be corrected in an orderly way."
According to the commission's estimates, Germany's deficit is expected to reach 3.9 per cent this year and 5.9 per cent in 2010.
This is likely to make it more difficult for the country's incoming centre-right coalition government to cut taxes, as promised during its successful election campaign.
The commission has estimated a deficit of 4.5 per cent for Italy, although the country's latest Economic and Financial Planning Document (DPEF) predicts a much higher deficit of 5.3 per cent.
The deficits of the other countries targeted by Wednesday's report range from 3.4 per cent in the Netherlands to 6.5 per cent in Portugal.
The commission is expected to formally launch excessive deficit procedures in mid-November.
Countries which do not come up with a convincing plan to reduce their deficits risk facing an infringement procedure and, possibly, a fine. (dpa)