German Social-Democrats debate scrapping EU Stability Pact

The German government has announced that it is not prepared to
sacrifice its embryonic economic recovery for the Stability and
Growth Pact and is expected to exceed the three per cent budgetary
deficit ceiling in 2005 for the fourth time. Finance Minister Hans
Eichel rejected calls to implement a new austerity package in the
2005 budget, as the signs of economic recovery were still too
fragile and it was as yet unclear how strong and sustainable the
upturn would prove to be.

Open debates over the future of the pact have now began within
Germany's leading government party SPD. Eichel emphasised that
while he was hoping for some more flexibility, he wanted to keep up
the principles of the Stability Pact. "Uns geht es nicht um eine
Änderung des Stabilitätspakts, sondern um eine vernünftige
Handhabung," [we are not looking to change the Stability Pact, but
to apply it sensibly] he was quoted as saying in the Süddeutsche
Zeitung.

Meanwhile, party chairman Franz Müntefering has openly called
for a debate on the future of the Stability Pact. Europa had to
decide which 3 per cent target was more important - cutting
budgetary deficit or increasing investment in research and
development to boost the EU's competitiveness. In his view, these
two goals are not compatible at the moment, and research and
education have to take priority over the Stability Pact.

Germany had previously pledged to bring its deficit down under
the three percent mark by 2005, but economic forecasts have doubted
this (see

). Against the backdrop of the ECJ's ongoing deliberations
of the Commission's case over the Pact's suspension, the internal
German discussions are likely to reignite an EU-wide debate over
the future of the eurozone's fiscal rules. 

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• LinksDossier:Investitionen in Forschung
• Presseartikel:Financial Times, Süddeutsche Zeitung Süddeutsche Zeitung Der Spiegel Süddeutsche Zeitung Der Spiegel Financial Times Deutschland