Missing billions blow Germany's EMU target off course
The shortfall is the result of slower than expected economic growth in the first half of the year, and, consequently, larger than projected state spending on the growing number of unemployed. Nearly half-a-million more Germans are out of work now than this time last year.
The new hole, which was predicted by opposition parties months ago, comes as a severe embarrassment to the government and especially to Theo Waigel, the finance minister. He has staked his political future on the pledge that Germany will fulfil to the last decimal point the Maastricht deficit criteria.
With no chance of fulfilling the requirements on total public debt, the government is committed to keeping the budget deficit under 3 per cent of GDP. Having placed the budget on course for a "point landing", Mr Waigel urgently needs to find the missing money.
"Despite expected tax revenue shortfalls, it will be possible to hold to the Maastricht Treaty's 3 per cent criterion," Mr Waigel declared yesterday. That has been the mantra all year, amid deteriorating economic conditions.
Although decimal points are largely academic, the three-point-nought goal has become a totem of commitment to a hard euro; a symbol of Germany's determination to allow no slacking off.
Yesterday's estimates come in the wake of a series of crises over the budget, each of which threatens the survival of Chancellor Helmut Kohl's government and the prospects of the euro.
Six months ago, when the same experts uncovered the first of the budget holes, Mr Waigel was forced to fly cap in hand to the gnomes of Frankfurt.
His scheme to convert the Bundesbank's hoard of gold into government assets was defeated by the bankers, and Mr Waigel had to sell off shares of some publicly-owned companies instead.
In spite of the setback, the finance minister has not yet renounced alchemy. "Interest-swaps", the withholding of debt repayments and other financial trickery are likely to feature in his arsenal in the last two months of the year. Such measures, coupled with yet more cuts in public spending, should ensure that, come 31 December, the books will show the numbers that everybody in Europe wants to see.
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
- 5 UK weather: 'Coldest night of the year' tonight as freezing temperatures plummet to -10C
Millions of Britons struggling to feed themselves and facing malnourishment
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
£32000 - £40000 per annum: Recruitment Genius: A Business Manager is required ...
£45000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...
£20000 per annum: Recruitment Genius: Panel Wireman required for small electro...
£25000 - £27000 per annum: Recruitment Genius: An SME based in East Cheshire, ...