Germany may succeed in cutting its budget deficit to below the European Union's ceiling in 2005, European Commission president Jose Manuel Barroso was quoted saying on Saturday. "I'm not so sure that Germany will be in violation of the Maastricht criteria in 2005," Barroso told Bild am Sonntag newspaper, referring to Maastricht Treaty rules that include deficit limits of three percent of gross domestic product.
"I hope that it won't happen," he added.
Finance Minister Hans Eichel has said German federal, state and local authorities had committed themselves to keeping Germany's budget deficit below three percent of GDP in 2005 specified in the Stability and Growth Pact after breaching the threshold the last three years.
The Bundesbank said in a recent report, however, that there was a "considerable risk" Germany's deficit would breach the Stability Pact for a fourth year in a row.
Barroso expressed understanding for Germany's position, noting the government has struggled with extraordinary costs associated with German reunification in 1990.
"In any event we should not forget that Germany is still carrying the heavy burdens of reunification. And besides that Germany is the largest net contributor to the EU."
He repeated his opposition to rewriting the budget deficit rules.
"If we start taking individual items out of the calculations we don't know where that will end," he said. "We would soon end up not having any stability pact any more."
Barroso also said Europe needed to improve its competitive position otherwise it would have no chance of keeping up with the United States and China in global markets. He said social welfare systems and labour markets in the EU needed reform.
"We need to invest more in education and research," Barroso said. "If we don't act now we'll regret it later."
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