The government is seeking to raise its borrowing requirement by an additional DM8bn-DM10bn (pounds 2.7bn-pounds 3.4bn). This would take the German budget deficit to DM63bn.
Julian Jessop of Nikko Europe says he now expects the German deficit to overshoot the Maastricht-imposed limit of 3 per cent of gross domestic product by as much as half a percentage point. However, some of our panel say recent comments from the Bundesbank hinted at a softening of the central bank's line on entry criteria. There is a growing feeling that with both Germany and France struggling to meet the criteria, some relaxing of the rules is likely.
German unemployment figures, due on Tuesday, will be watched with interest as these have recently been higher than forecast. With France also struggling to meet the 3 per cent limit, experts are waiting for an audit of the French accounts on 21 July.Reuse content