German minister signals support for weaker Eurozone deficit rules

SIGMAR Gabriel, Germany’s economy minister and one of the social democrats in the country’s coalition, yesterday expressed support for extensions on the Eurozone’s strict deficit targets.

Gabriel suggested that countries passing significant reform programmes could be given more time to reach the three per cent of GDP deficit target that euro area governments must work towards, but did not make clear how such a system would work in practice.

Gabriel spoke alongside French economy minister Arnaud Montebourg during a visit to the country. Montebourg, one of France’s most outspoken ministers, has also called for more flexible public spending rules.

The French government will release a mini-budget later this week, which will be “crucial” to show if France can reduce its deficit to three per cent by 2015, according to BNP Paribas analysts.

The statement by Gabriel marks a significant divide within the German government – finance minister Wolfgang Schaeuble has generally been one of the politicians most keen on the bloc’s deficit reduction targets since the sovereign debt crisis.

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