10 December 2001, 13:42 Eichel says any govt economic intervention may damage confidence in euro
FRANKFURT (AFX) - Any programme by the German government to boost
the economy runs the risk of violating the EU Stability Pact and
eventually endanger confidence in the euro, finance minister Hans
Eichel said.
In an article in the Frankfurter Rundschau, responding to calls for
such an intervention from the president of the German industry
association, Eichel said Germany's budget deficit this year is
approaching the 3 pct of GDP limit stated in the Maastricht Treaty.
"There is no longer any room for manoeuvre at all for a
debt-financed economic programme. Otherwise there's a danger of running
against the criteria of the European Stability and Growth Pact," he
said.
"That in turn could put in peril the confidence in the young euro
currency. If the European Central Bank then reacts with interest rate
increases, that would damage by far the economy and would not only
remove the advantages of any debt-financed expansive program for the
economy but cause the situation to deteriorate," Eichel said.
Eichel also said for the first time in many years, Germany's
jobless at the end of the economic downturn -- which he said is in the
first-half next year -- will be less than at the start of the cycle.
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