The German government is mulling a request to the European Commission for additional time to comply with new budgetary rules due to the country’s weak economic outlook, dpa learned on Wednesday.
Sources in the Finance Ministry said Germany could ask for an extension to its medium-term fiscal structural plan from four years to seven years, under fresh European Union regulations adopted earlier this year.
The ministry believes that public finances remain solid, pointing to the country’s debt brake, which limits structural budget deficits to no more than 0.35% of gross domestic product (GDP).
However, with growth expected to remain sluggish in the coming years, Germany is likely to struggle to bring its public debt under the EU’s target threshold of 60% of GDP within four years.
The ministry suggested that the German government is aiming to serve as a role model by holding to the new budgetary rules, but to do so, it may have to extend the four-year plan submitted to the EU to seven years.
This would require a commitment to implementing certain economic reforms and investments to improve growth potential and resilience.
