The European Commission is set to officially declare on Wednesday that Germany posted an excessive deficit in 2002 and to suggest corrective action, an official said.
This will represent the next step after the European Union's executive arm in November opened an "excessive deficit procedure" against Berlin for allowing its shortfall to breach euro-zone rules, spokesman Mr Gerassimos Thomas said today.
Mr Thomas said the commission would "most probably" confirm that Germany posted a deficit of more than 3 per cent of gross domestic product (GDP) last year and will, as in the case of Portugal, make recommendations.
The 3-per cent limit is set out in the 1997 Stability and Growth Pact, which governs economic policy-making in the 12-nation euro zone. The German government expects its deficit to have been 3.75 per cent of GDP in 2002.
Mr Thomas declined to say whether Germany's worsening economy would hinder its ability to bring the deficit below 3 per cent this year and so avoid the threat of financial sanctions laid down in the stability pact.
European sources said the commission would give Germany five months to enact measures aimed at correcting the situation.
AFP