Brussel bereidt sancties voor tegen Berlijn om overtreding euro-regels (en)

As the European Commission today prepares to unveil measures that Germany should take to improve its budgetary situation, the monetary affairs commissioner, Pedro Solbes has sharpened Brussels' rhetoric against the EU's biggest economy.

In an interview with French business daily La Tribune, Mr Solbes said, "if it was sufficent for a country to sit around a table and talk in order to be considered co-operative and avoid sanctions, then it would be a different pact".

This is a flat rejection of German finance minister Hans Eichel's opinion that Germany should escape EU sanctions - which could run into billions of euro - because it has co-operated with the Commission.

But in his interview, Mr Solbes makes it clear that actions, not words, are what counts.

Painful times ahead for Germany

This awkward situation has arisen because Germany has broken the rules that underpin the euro for three consecutive years.

The rules state that a country's budget deficit - tax receipts minus public spending - must not be higher than three percent of its gross domestic product (GDP).

If a country breaks these rules, the Commission may demand that it cut public spending or raise taxes to bring the deficit back below the ceiling.

Mr Solbes will unveil such measures to Berlin today. It is widely expected that he will request a further spending squeeze of six billion euro.

Berlin is likely to refuse to implement these measures, arguing that it could throttle a hint of recovery in Germany, which for several years has suffered from low growth and high unemployment.

If Mr Eichel does refuse, the next step is for the Commission to recommend fines.

Commission split

The Commission is said to be divided on the issue.

According to media reports, German budgetary commissioner Michaela Schreyer backs a tough stance against Berlin but her colleague in the Commission, enlargement commissioner Günter Verheugen, supports Berlin's position.

Commission President Romano Prodi, who last year called the euro rules "stupid" is backing Mr Solbes. He said, "rules without sanctions exist in paradise, but not in Brussels".

Over to the Member States

The Commission's recommendations must be ratified in the Council of finance ministers next Monday (24 November) by a qualified majority of member states.

If the matter is put to a vote, as expected, Germany and France - which is in the same budgetary boat as Berlin - should be able to rouse sufficient support amongst other countries to slap down the Commission. But many would see this as the death of the beleagured euro rules.

The Netherlands, Finland and Austria are pushing for a strict application of the rules and believe France and Germany should be treated the same as other countries.