German Concerns Over Pact Commitments

The German government cautioned Thursday that it was becoming increasingly difficult for it to meet its budget commitments under the EU Stability and Growth Pact as high unemployment and slow growth tear ever bigger holes in the public purse. Germany, the eurozone's biggest economy, has been in breach of the deficit limit for the past three years and, despite government pledges to rein in the deficit, observers believe that the 2005 deficit ratio will again exceed 3.0 percent. Finance Minister Hans Eichel nevertheless ruled out any additional belt-tightening measures to aid the cause. "Additional spending cuts don't resolve anything ... but weigh on investment and on the economy," the minister said. "We'll try to resolve (the budget problems) with a number of exceptional measures this year," Eichel added, without providing any details