German Finance Minister Mr Hans Eichel today denied reports of a €14 billion hole in Germany's 2002 budget.
"There is wild speculation everywhere at the moment. There is no point in talking about these figures until we've seen the tax estimates in November," Mr Eichel told reporters before a meeting of his Social Democrat parliamentary party.
Media reports have said weak tax revenue and the high cost of unemployment benefit in Europe's biggest economy could put a €14 billion hole in this year's budget.
But Mr Eichel conceded for the first time yesterday that Berlin would be unable to keep its budget deficit below the EU's 3 per cent of gross domestic product (GDP) limit in 2002 and said he could not rule out a supplementary budget.
The European Commission said last night it would begin a formal procedure against Germany if the country's public deficit breaches a limit of 3 per cent of gross domestic product this year.
The 3 per cent ceiling was agreed under the EU's 1997 Stability and Growth Pact, which Berlin was instrumental in setting up, demanding at the time strict limits on public finances in order to underpin the success of the euro.
The commission statement by European Economic and Monetary Affairs Commissioner Mr Pedro Solbes came only hours after German Finance Minister Mr Hans Eichel said his country would exceed this year the 3 per cent ratio ceiling set out in the EU's Stability and Growth Pact.