Missing billions blow Germany's EMU target off course

Germany is 40bn deutschmarks short of achieving the goals laid down by the Maastricht Treaty for European Monetary Union. In their half- yearly report, experts estimating the government's tax revenue yesterday uncovered a hole that is DM17.3bn deep this year, and they said another DM22.4bn would go missing next year.

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.

-

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: IT Support Technician

£20000 - £22000 per annum: Recruitment Genius: This is an intermediate help de...

Recruitment Genius: Personal Injury Fee Earners

£15000 - £25000 per annum: Recruitment Genius: This specialist personal injury...

Recruitment Genius: New Business Sales Executive / Business Development

£20000 - £30000 per annum: Recruitment Genius: Join a fast growing, UK based I...

Recruitment Genius: Tennant Liaison Officer

Negotiable: Recruitment Genius: An experienced TLO is required to manage, deli...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen