VIENNA (Reuters) -The European Commission will probably not impose a so-called excessive deficit procedure on Germany for breaching the EU’s budget deficit cap this year, Economic Commissioner Valdis Dombrovskis told the Financial Times.
Germany’s new conservative-led coalition government has said it does not expect a planned spending spree, including on defence, to be found in breach of European Union rules that cap budget deficits at 3% of gross domestic product.
Berlin’s budget deficit is expected to come in at 3.3% of GDP this year, but since defence spending fully accounts for the amount over 3%, Germany “is likely not to end up in (the) excessive deficit procedure”, Dombrovskis was quoted as saying in the FT interview published on Sunday.
An excessive deficit procedure involves the Commission and EU finance ministers setting a corrective course to bring a member state’s deficit back within the 3% limit. A country’s failure to do so can in principle eventually lead to a fine.
“We have to see the execution, because it’s close (but) if everything holds, then it should not be the case for this year’s budget,” Dombrovskis said, adding that a final assessment would take place in the spring when data for 2025 is available.
Under the EU’s new fiscal rules, which the previous, more fiscally conservative German government helped negotiate, member states can exclude some defence spending from their deficits.
(Reporting by Francois Murphy;Editing by Helen Popper)
