Brussels, 19/11/2003 (Agence Europe) - Germany reacted angrily to recommendations proposed on Tuesday by the European Commission for ending the excessive deficit procedure in the country (EUROPE yesterday p 12). Germany should not be expected to "be inundated by sanction proceedings", given that the German government has "up till now followed all Commission recommendations", declared the German Finance Minister, Hans Eichel in initial reactions to the Commission decision. Nevertheless, he underlined that Berlin was "seeking a common solution" with the European Commission.
The interpretation of the Stability and Growth Pact as interpreted by Germany was rejected by Commissioner Pedro Solbes for whom "there is not legal basis to this distinction between co-operative and un-cooperative country. The German government consider that a country that "co-operates" in reducing its deficits should not be threatened with sanctions and refuses to take budgetary measures which, according to Mr Eichel, "prolong the crisis". On the contrary, Germany is seeking to increase growth, which has been moribund for three years, stressed Mr Eichel.
Presenting the Commission decision during a press conference in Strasbourg, Pedro Solbes, hoped that the Council would reach an agreement on the French and German deficits in respect of the Stability Pact proceedings. The decision on Germany was reached by a "clear majority…without a vote against", he noted, and in reply to the question of why discussions had lasted long, he pointed out that it was "because different Commissioners wanted to know more or say what they thought of certain specific aspects of the recommendations". Mr Solbes' spokesman also acknowledged on Wednesday that the case had retained the attention of the Commissioner as at that moment, a Member State was opposing the proceedings and the Commission had decided to go on to the following stage. The spokesman indicated that "it's this that makes it important".
Addressing the press, Mr Solbes explained that the Commission was convinced that ,j in order to obtain a deficit reduction by 2005 it would be better to start efforts again and ask Germany for a greater reduction of the structural deficit in 2004 (by two thirds) rather than in 2005. Mr Solbes insisted many times on the fact that in relative terms, the Commission is requesting Germany to make a similar effort to that asked of France. Germany is being called on to reduce its structural deficit (outside the particularities of the economic situation) buy 0.8% of GDP in 2004 whereas the German budget was planning on a reduction of only 0.6% next year.
France should, according to the Commission, to reduce its structural deficit by a percentage point of GDP next year as opposed to the 0.6% planned on by the French government. France is at the moment being more conciliatory than Germany. The French Minister of the Economy, Francis Merl declared on Monday that on Monday he intended to present his partners with the new economic measures (including those on health) during the Eurogroup meeting.
Asked about the situation in Portugal, Mr Solbes pointed out that the deficit of the country for 2003 was less than 3% of GDP but admitted that the would have to work on figures that would not be available before February next year. If the figures confirm indications, Portugal ""will be able to live as it does now", indicated the Commissioner.