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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