Germany to breach EU deficit rules
Welfare costs are increasing in Germany, and could cause it to breach EU deficit rules again. Chancellor Merkel’s reform plans may be in jeopardy, but it does justify a planned VAT hike to make up for the increased costs. Unemployment benefit figures, and economic growth will determine the final picture for Germany.
The cash shortfall will undermine German Chancellor Angela Merkel’s reform agenda and may put her in breach of euro stability rules in 2007.
FT Deutschland has seen confidential government statistics showing that a steep rise in the number of households claiming long-term unemployment benefits could bring this year’s deficit from a planned €38.3bn to well above €40bn.
The figures will severely undermine Merkel’s efforts to bring the country’s finances under control after she took power from Gerhard Schroeder last autumn.
Administrator @ April 21, 2006