European Central Bank council member Mr Ernst Welteke said today that Germany was coming dangerously close to the EU's three per cent budget deficit ceiling but was not expected to exceed it.
Mr Welteke told Berliner Zeitungnewspaper in an interview that the German government's tax cuts were leading to reductions in tax revenue "that contribute to our dangerously nearing the three percent criterion of the Stability and Growth Pact".
But he added: "We still assume that the German budget deficit will not exceed three percent of gross domestic product."
Germany's deficit hit an estimated 2.6 per cent of national output in 2001 and is seen edging up to 2.7 per cent this year, not far from the three per cent limit that triggers fines under the rules of the European Union's Stability Pact.
Germany escaped an embarrassing EU rebuke in February over its deficit after exerting political pressure on its partners, but committed itself to bringing its budget close to balance in 2004 - a pledge that requires further spending cuts at a time of feeble economic growth.