Machtsstrijd verwacht na Duitse weigering om aan Euro-regels te voldoen (en)

EUOBSERVER / BRUSSELS - The gloves are off in the spat between Brussels and Berlin over Germany's economy.

As expected, the European Commission - after a lengthy and apparently divisive meeting yesterday - issued a demand for Germany to make a further six billion euro spending cuts next year.

Berlin will also have to draw up detailed plans outlining how it intends to implement these cuts by 9 January 2004.

But Germany - like France - will be given an extra year to comply with the euro rules.

Economics and monetary affairs commissioner Pedro Solbes said Berlin would have until 2005 to bring its budget deficit - tax receipts minus public spending - below the ceiling of three percent of GDP imposed by the euro zone's spending rules.

Power struggle ahead

However, Berlin still reacted angrily to the demands, claiming that further spending cuts would only serve to exacerbate Germany's economic problems.

Given the efforts Germany has already made at economic reform, it was hoping for "another, more measured response from Brussels", said Finance Minister Hans Eichel yesterday.

This all adds up to a potentially stormy power struggle at next week's meeting of finance ministers, to be held in Brussels on Monday 24 November.

EU finance ministers will have to vote whether to approve the recommendations of the Commission on France and Germany.

It is thought that the two large countries have enough support to block Brussels' unwelcome demands, but some small countries, notably Austria, Finland and the Netherlands, would be furious at what they see as France and Germany throwing their weight around to avoid playing by the rules.

If the recommendations are rejected, it would almost certainly mean the end of the beleagured Stability Pact.

Commission President Romano Prodi, who has previously described the Pact as "stupid", said yesterday that finance ministers had tried to "sign the death sentence of the pact".

In theory, if France and Germany refuse to carry out the Commission's wishes, they can be fined billions of euro.