Germany's five economic "wise men" today warned that the budget of the eurozone's largest economy was getting out of control In their full year report, the wise men said, "The German budget situation is getting out of control." However, they rejected any idea that the EU's controversial Stability and Growth pact, which oversees budgetary policy, could be changed, as this would undermine credibility in the euro. They also expect the government's budget deficit to clearly break the rules of the EU Maastricht treaty both this year and next year. The economic experts forecast the government's budget deficit to reach 3.7pc of GDP this year, and fall only slightly to 3.3pc next year.
The report tallies with the latest assessment of Germany's economy by the European Commission, which in its autumn bulletin, published today, warned that Germany and Portugal would both breach the guidelines set out in the Growth and Stability Pact The Commission was even more downbeat about Germany's budgetary situation, forecasting a deficit of 3.8pc of GDP this year and 3.1pc in 2003.//www.fxcentre.com