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UK accused of delays in cutting deficit

John Eisenhammer
Monday 19 September 1994 23:02 BST
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FRANKFURT - Gert Haller, the German government's sherpa at international financial summits, yesterday accused Britain of making insufficient progress in cutting its large public deficit, writes John Eisenhammer.

Even though they do not have the historic burden of unification, Britain, France and Italy were failing to make the sort of progress seen in Germany in cutting structural spending deficits, he said.

At the Group of Seven meeting in Madrid at the end of September the structural deficits of those European countries which were not being cut back would be high on the agenda, he said. Mr Haller, state secretary at the Bonn Finance Ministry, said the worries of international investors about public spending policy were helping to push up long-term interest rates.

Mr Haller stressed the importance of the European Union holding strictly to the economic convergence criteria set out in the Maastricht treaty. 'When it comes to applying the convergence rules the Commission should be more on the rigid side, or it will undermine the credibility of the whole exercise,' he added.

The Bundesbank expects Germany to fall within the public spending limit set by the Maastricht treaty next year. The central bank stated in its September monthly report that it expects the total public deficit in 1995 to narrow by nearly DM60bn to DM100bn, bringing it well below the Maastricht level of 3 per cent of GDP.

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