EU should dole out stricter penalties after Greece, Berlin says
The European Union will have to mull stricter penalties against member states over budget deficits, Germany said on Monday, in the wake of the Greece crisis that has knocked confidence in the euro.
"Without a doubt, we are going to have to think about ... new rules and sanction possibilities," a spokesman for the German finance ministry told reporters in a regular briefing.
Under EU rules, a member state's budget deficit should not exceed three percent of its gross domestic product (GDP), and members of the 16-nation eurozone are in theory subject to penalties if they exceed this limit.
The global recession has pushed deficits through the roof, Germany's included, but Greece has been a case apart, with government overspending reaching 12.7 percent of output in 2009.
This has put Greek government bonds under pressure, weakened the euro and pushed the eurozone into its biggest crisis since its inception in 1999. Greece has vowed to slash spending in an effort to rein its deficit.
Germany described as "speculation" on Sunday a report in news magazine Der Spiegel that the eurozone might provide Greece with €20 billion in loans and €25 billion in loan guarantees.