Schroder backs embattled Eichel

Germany's embattled finance minister, Mr Hans Eichel, received the public backing of Chancellor Gerhard Schröder yesterday when a government spokesman dismissed rumours the minister was to be fired.

The spokesman also rejected media reports that Mr Eichel, facing a ballooning budget deficit and a further breach of the Stability and Growth Pact in 2005, is no longer on speaking terms with several cabinet members.

"The finance minister has, like all members of the cabinet, a mandate for the full legislative period," said Mr Bela Anda, the government spokesman. "He wants to hold onto that and he will hold onto it until the end."

Mr Eichel admitted at the weekend that Germany will probably breach the Maastricht criteria for the fourth consecutive year in 2005, despite promises to the contrary made to Brussels.

Speculation about Mr Eichel's future began two weeks ago after the finance minister, known for his fiscal discipline, reportedly clashed with his colleagues after a meeting to consider measures to stimulate the stalled German economy.

One of the possibilities considered was a departure from Mr Eichel's austerity measures of recent years in favour of deficit spending to boost consumer confidence.

Yesterday's public backing of Mr Eichel seemed intended to send the signal that Berlin is sticking with Mr Eichel and his budgetary discipline. "It's business as usual," said a government spokesman.

Several German media reports suggested otherwise: both Der Spiegel magazine and the Financial Times Deutschland (FTD) suggested that Mr Eichel's cabinet colleagues now avoid him and instead "go directly to the Chancellor".

Several prominent ministers, as well as leading politicians in the Social Democratic (SPD) and Green coalition partners, are said to still favour increased spending to stimulate the economy.

Mr Franz Münterfering, the SPD leader, said yesterday that Germany "cannot keep turning the savings spring further each year: that would stall the economy".