Finance ministers doubt German budget claims

European finance ministers warned Germany today that it would have trouble meeting its commitment to rein in its budget deficit next year if growth fails to meet Berlin’s optimistic projections.

Adopting recommendations from the European Commission, the ministers said Berlin’s programme “may be insufficient to correct the excessive deficit in 2005.”

They pointed to prospects for lower-than-expected growth and higher-than-expected expenditures, particularly on unemployment, pension and health benefits.

The recommendations were adopted “without difficulty,” said Ireland's Finance Minister Charles McCreevy, who chaired the meeting in Brussels.

EU Economic and Monetary Affairs Commissioner Pedro Solbes said he was reassured that Berlin had promised to enact additional measures if required. But he also expressed disappointment that a target date for a balanced budget was dropped altogether.

German Finance Minister Hans Eichel rebuffed the criticism. He said he doesn’t share the opinion of ”risks,” explaining that Germany usually enjoys “an extremely high growth rate” after a period of weakness.

Even if growth is lower than Germany’s prediction of 2.25% next year, he said the German deficit would still come in under the EU’s cap of 3% of gross domestic product.

At a contentious meeting last November, the ministers allowed France and Germany to breach the budgetary guidelines this year in exchange for promises to come back in line in 2005.

French Finance Minister Francis Mer reiterated that promise today, although his budget plans were not up for review.