Solbes geeft commentaar bij excessieve-begrotingstekort-procedure tegen Duitsland (en)

Ladies and Gentlemen,

The College has taken today a very important decision in the application of the Excessive Deficit Procedure. The positions of the various member states are by now well known by now through the press.

Against this background the College discussed the German case in depth as it had done with the French case. The College stood firmly by the principle that we are a Community of law and that the Treaty and the Stability and Growth Pact have to be applied together. They are our only guarantee for the well functioning of our Union and the sensible governance of our currency, the euro.

A few words now on the substance. The Commission estimated in its Autumn forecast a deficit of over 4% of GDP . for 2003 This forecast confirms the German authorities' publicly expressed view that the general government deficit in 2004 is likely to exceed 3% of GDP.

Despite the budgetary consolidation measures taken during 2003 which I highly appreciated and supported - Germany is in non-compliance with the second Council recommendation of last January. It will not end the excessive deficit situation in 2004 as required by the Council.

The Commission has an obligation under the rules laid down in the Treaty Article 104(8) and Regulation 1466/97 of the Stability and Growth Pact to inform the Council of this fact and recommend further steps to be taken according to Article 104(9) of the excessive deficit procedure.

The Commission has considered several arguments when preparing its recommendations:

• the cumulated loss of real GDP growth over the period 2003-2004 compared with what was expected in the earlier Autumn 2002 forecast amounts to about 2 percentage points.

• the fiscal effort necessary to bring the general government deficit below the Treaty reference value of 3% of GDP in 2004 is now larger than what was expected in January 2003, when the Council adopted the recommendation according to Article 104(7). Based on the Autumn 2003 Commission forecast, the required improvement in the cyclically-adjusted balance, is currently estimated to be of the order of 1.3 percentage points. This is despite the useful fiscal consolidation efforts taken by Germany in 2003. It is true that if Germany had not taken measures this year the deficit would have been in excess of 4.75% of GDP.

Weighing these arguments, the Commission has opted for granting an extra year for the correction of the excessive deficit, as it has proposed for France. In order to avoid risks of persistence of the excessive deficit situation in 2005, the Commission is of the opinion that roughly two thirds of the required overall fiscal consolidation of 1.3% over two years (2004-05) should take place the first year, i.e. in 2004. This is in relative terms the same effort as requested for France.

On this basis, the Commission has submitted to the Council an Article 104(9) recommendation asking Germany to:

put an end to the present excessive deficit situation as rapidly as possible and at the latest by 2005;

achieve in 2004 an annual reduction in the cyclically-adjusted balance by 0.8 percentage points of GDP.

achieve in 2005 a further reduction in the cyclically-adjusted deficit by at least 0.5 percentage points of GDP or by a larger amount so as to ensure that the general government deficit is well below 3% of GDP;

It goes without saying that these recommendations have to be implemented hand in hand with the very important structural reform programme of Chancellor Schroeder. The Commission fully supports agenda 2010 and we consider the guarantee to the reversal of the long-term problems of the German economy. I remain convinced that it is with reforms that the German economy can start growing again and not with high deficits. I am confident that on this basic message we do agree with the German government.