Finance Minister Mr HansEichel defended Germany's Agenda 2010 economic reform plans today, calling deficit-cutting recommendations the EuropeanCommission is expected to make to Germany unreasonable.
"If I see the efforts we are taking with Agenda 2010 andwith cutting subsidies and trimming the social security system,then my friends, you have to say there is a different, morereasonable answer from Brussels than the one we seem set toreceive," Mr Eichel told the annual Social Democrats conference.
The European Commission is expected today to proposegiving Germany an extra year to reduce its budget deficit belowthe bloc's three per cent of gross domestic product limit butBerlin may be urged to make additional budget cuts in 2004.
German government sources who have seen the Commission'sproposal say the EU's executive arm will urge Germany to cut itsstructural deficit by 0.8 percentage points of GDP.
Mr Eichel said he was nevertheless committed to the EU'sBudgetary rules as laid out in the Stability and Growth Pact.
"We must rid ourselves of debt. I say to Brussels I want theStability and Growth Pact. I want it as it is," he said, addingthat was the shared position of the government.
However, he urged Brussels not to strangle Germany's fragileeconomic recovery after three years of stagnation.
"We have to recognise that consolidation in stagnation isdifferent from consolidation in a boom. In a boom, I have totake out money, but in a stagnation I cannot take restrictive,contractive, pro-cyclical finance policy. Otherwise I wouldprolong the stagnation," he said.
The Commission, which was meeting this afternoon, wasexpected to reveal its recommendations for Germany, whosedeficit is set to breach EU rules for a third year in 2004.