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The German Finance Ministry is not concerned about violating European Union debt rules despite a warning from the European Commission.
The German government is “expressly committed” to complying with the new EU fiscal rules to strengthen the sustainability of public finances, a spokeswoman for the Finance Ministry said on Wednesday.
The commission published an assessment of EU countries’ spending plans with Germany’s cumulative spending expected to be outside of the agreed limits.
The German Finance Ministry stressed that the excess spending projected by the commission is small and that the new German government needs to produce a new budget draft for 2025 anyway.
The draft for the 2025 federal budget assessed by the commission has so far only been approved by the Cabinet in Berlin – with existing gaps amounting to billions.
The collapse of Germany’s three-party coalition over differences on how to tackle the country’s economic problems prevented the German parliament from passing the budget.
It is now expected that the budget for the next year will be adopted by the new German government.
Germany like other richer members of the bloc, Austria and the Netherlands, is usually an avid defender of strict spending limits compared to less affluent southern EU countries.
Sluggish recovery from the economic fall-out of the Covid-19 pandemic and Russia’s war against Ukraine, however, have made usually frugal EU countries struggle to keep their expenditure low.
EU countries are obliged to keep their deficit below 3% of gross domestic product (GDP) and their debt below 60% of GDP.
The budget evaluation for Germany came after the bloc’s debt and deficit rules were reformed earlier this year.
Next to annual draft budgets, capitals now have to submit multi-annual spending plans to the commission with the aim of making European economies more robust and public finances more sustainable.