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Business

Brussels Expects Berlin, Paris Will Breach Deficit Limits

The European Commission said Wednesday it expects Germany and France will fail to keep their budget deficits under the euro zone’s three percent limit in 2004. If consolidation steps are not taken, the euro area’s two largest economies could also breach the three percent of GDP limit for a fourth consecutive year in 2005. “Public finances are not in good shape,” Monetary Affairs Commissioner Pedro Solbes told a Brussels news conference, according to Bloomberg News. Designed to protect the stability of the single currency, the deficit limit rule could mean Brussels might sanction Berlin or Paris if they do not do enough to put their budgets in order. Germany's cabinet on Wednesday approved a suplemental budget with a record €43 billion ($50 billion) in new debt for this year, bringing the national debt up to €820 billion.