Germany threatened with EU sanctions

Germany could face radical restrictions on its domestic fiscal policymaking as early as the beginning of next year if it exceeds the European Union’s Stability and Growth Pact's deficit limit in 2004, the European Commission has warned. "If Germany breaches the stability pact's 3 percent ceiling next year, we will present Ecofin with a new recommendation. It is our duty," said Pedro Solbes, the European Union's monetary affairs commissioner in an interview with the Financial Times Deutschland. The latest warning puts more pressure on the German government to bring its fiscal system under control by next year. German Chancellor Gerhard Schröder hinted last month that a breach of the stability pact for a third year running in 2004 could not be ruled out. If Germany does in fact violate the pact in 2004, Ecofin, the council of EU finance ministers, would have the right to impose fiscally-binding sanctions against Germany.