German Deficit to Hit 3.6 Percent of GDP?

Germany's public deficit is expected to hit 3.6 percent of gross domestic product (GDP) this year, well in excess of the 3.0 percent limit required under the EU Stability and Growth Pact, according to a government document quoted by the press. The Sunday paper Die Welt am Sonntag said the shortfall in tax revenues would total five billion euros ($6.3 billion), while 10 billion would be needed to combat unemployment. A finance ministry spokesman Saturday queried the figures given by the paper, but admitted this year's budget would have problems. On May 12 Finance Minister Hans Eichel admitted it was becoming "more and more difficult" to bring the deficit back within European Union limits. Germany, the euro zone's biggest economy, has been in breach of the 3.0 percent barrier for the past three years and, despite government pledges to rein in the deficit, observers believe the ratio will again be exceeded. The problem for the government is that slow growth and high unemployment are tearing big holes in its public finances.