Greens: Deficit Will Breach EU Rules Again

The environmentalist Green party, part of the ruling coalition with Chancellor Gerhard Schroeder's Social Democrat (SPD) party, believes that Germany will remain in breach of the EU's budget rules this year, a key official said Monday. "The development on the labor market suggests we can't expect anything else than to breach the 3.0-percent limit," the Green's budget spokeswoman Anja Hajduk told the Frankfurter Allgemeine Zeitung newspaper in an interview. Under the terms of the European Stability and Growth Pact, euro-zone countries are not allowed to run up public deficits in excess of 3.0 percent of gross domestic product (GDP). But Germany, which originally masterminded the pact, has breached the rule for the past three years and, despite public pledges to rein in its deficit this year, is widely expected to do so again this year. With growth in the euro-zone's biggest economy still anemic and unemployment not far from postwar records, the chances of bringing the deficit ratio back below 3.0 percent appear slim. Last week, the government cut its 2005 growth forecast to 1.0 percent from 1.6 percent previously.