Think Tank Predicts Worsening Budget Deficits

A report by one of Germany’s leading economic think tanks said that the government's goal to bring the country’s public deficit back within EU limits next year is not achievable. The claim, made in a report on Wednesday by Berlin-based DIW, an economic research institute close to the Social Democratic Party, predicted the German public deficit would shoot up to 4.3 percent of gross domestic product (GDP) both this year and next, far in excess of the EU limit of 3.0 percent. The report stated that federal, regional and municipal budgets will show a deficit of €80 billion ($86.4 billion) in 2003, €20 billion more than last year. The institute said that the shortfall could be even higher at €87 billion in 2004 if the next stage of the government’s planned tax reforms are brought forward.