Germany has escaped an election-year reprimand by its European Union partners over its surging public deficit after the euro zone's rules were tweaked to let Berlin off the hook.
Germany's partners hammered out a deal in which ministers were able to say German finances were a "cause of concern", while stopping short of a full and formal warning, which German Chancellor Mr Gerhard Schroeder said would be unacceptable.
The European Commission, which polices the EU's stability pact rules on deficits, had proposed an "early warning" be issued in accordance with the rules but did not gets its way.
EU Monetary Affairs Commissioner Mr Pedro Solbes said late last week that warnings for Germany and Portugal were justified because they would demonstrate "that budgetary policies can be steered in a transparent way".
Germany's deficit hit 2.6 per cent of national output in 2001 and is predicted to rise to 2.7 per cent this year because of the global economic slowdown. EU stability guidelines prohibit deficits exceeding 3 per cent of GDP.
Portugal also escaped censure. A commission spokesman said both countries had agreed in return to supress public spending and devote any future increases in government income to deficit reduction.
Ironically, it was Germany which insisted on the adoption of the stability pact back in 1997 as a way to curb government spending in traditionally profligate countries that were planning to join in the launch of the euro in 1999.