Tuesday

11th Aug 2020

Germany's budget deficit rises to 4 percent

New figures released on Tuesday (24 August) show that Germany is on course to breach the EU's strict budget rules for the third year in a row. Its public deficit soared to four percent of gross domestic product in the first six months of this year.

The German government had already predicted a budget deficit of 3.5% for this year, the third year in a row that it has exceeded the 3% limit set by the EU's growth and stability pact.

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  • (Photo: European Commission)

A separate report from the Federal statistics office showed that German economic growth has picked up in the second quarter, driven by strong demand for exports.

The German economy grew by 0.5% in the three months to the end of June from the previous quarter.

Exports rose 3.2 percent from the first quarter, while domestic demand unexpectedly fell 0.1 percent in the same period, reports Bloomberg.

The statistics also show that there was only a small increase in private and public consumption in Europe's largest economy and that there was a decline in construction and capital investment.

Bank of France

Meanwhile, the Bank of France is seeking restrictions on exceptional budgetary measures that member states use to reduce their public deficits, according to AFP

In its August monthly bulletin, the central bank called for "an improved framework on exceptional budgetary measures".

The central bank warned that use of exceptional measures "cannot substitute for efforts in budgetary structural reform ... in fact only delays them several years, at the risk of giving the illusion that the deterioration of the public finances is being limited and to make, in this situation, the unavoidable adjustment more difficult to the countries concerned".

Both sides claim victory in euro pact ruling

The European Commission and member states were both claiming victory on Tuesday in their battle over the rules underpinning the euro after the European Court of Justice appeared to give a clear ruling in favour of the Commission.

Top EU officials urge MEPs give quick budget-deal approval

MEPs criticised the EU deal on the budget and recovery package clinched by leaders after five days of gruelling talks, saying it is not enough "future-oriented", and cuts too deeply into EU policies, including health, innovation, defence and humanitarian aid

EU Parliament gears up for fight on budget deal

European parliament president David Sassoli said certain corrections will have to be made in the budget, citing research and the Erasmus program for students, calling the cuts "unjustified".

EU leaders agree corona recovery after epic summit

After gruelling five-day talks, EU leaders agreed on €390bn in grants and €360bn in low-interest loans to hardest-hit member states - after much opposition from the Dutch-led 'frugal' bloc of countries.

EU summit enters fourth day with recovery deadlocked

After bilateral negotiations continued all Sunday night, mostly to try to convince the 'Frugal Four' to move their red lines, European Council president Charles Michel is expected to table a new proposal on Monday afternoon with €390bn in grants.

EU leaders face off over corona bailout summit

EU leaders will face difficult and fundamental issues on Friday-Saturday (17-18 July), when they attempt to agree on the planned seven-year €1.07 trillion budget and €750bn recovery package.

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

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