CDU urges Germany to delay balanced budget


Germany should ignore fiscal commitments made to the EU and delay the target to balance its budget to 2006 from the current target of 2004, according to an economic think-tank close to the opposition CDU party.

Mr Kurt Lauk, who heads the CDU's economy council, said the aim to balance the budget by 2004 "is absolutely unrealistic", and should be abandoned to make way for a major new tax reform.

Quoted in the German press this morning, Mr Lauck said delaying the target would not bring Germany into conflict with the EU's stability and growth pact as the county had won a number of "get out clauses" from the EU in making its budget commitments.

"We cannot carry on having an unrealistic finance policy," Mr Lauk was quoted as saying.

The CDU's economic council is a think tank consisting of various business heads who put forward recommendations for the CDU to put into its economic policy.

Finance minister Mr Hans Eichel emphatically committed Germany to balancing the budget by 2004 earlier this year, in exchange for escaping an early EU warning over its high budget deficit.

Mr Edmund Stoiber, the chancellor candidate of the CDU and its Bavarian sister the CSU, has so far made no indication he would challenge the deficit targets if he wins power in September's general election.

But the comments from the CDU economy council come amid increasing doubts on France's commitment to the budget targets set out in the stability and growth pact.

President Jacques Chirac had said in the run-up to the presidential election he favours postponing the target until 2007 from 2004.

Meanwhile, French finance minister Mr Francis Mer said at the Ecofin meeting yesterday his government would not commit itself to the target of 2004 until an audit of public finances has been completed.