Germany's DIW urges setting up independent body

An EU independent body should be set up to decide on penalties that should be imposed on member states which violate the criteria laid out in the EU Stability and Growth Pact, Germany's research institute DIW president Klaus Zimmerman told reporters.

At a news conference on DIW's study on European economic stability, Zimmermann said instead of a group of ministers passing judgements on a country's macroeconomic conditions, a panel of "independent experts" should be set up.

Too much emphasis is now being placed on the pact's criteria that a country's budget deficit should not exceed 3% of GDP, he noted.

This 3% is a "relatively arbitrary figure", Zimmermann said. "Perhaps 4% would have been better."

He said in the future one should put more consideration on how the deficit came about in the first place.

"Whoever invests for the future should also be judged differently," he said. Higher deficits should be allowed under certain circumstances, he added. The DIW expects Germany's GDP growth next year at only 0.9%.