(Adds Gabriel quotes, background)
BERLIN, June 26 German Economy Minister Sigmar
Gabriel said on Thursday neither he nor anybody in his
centre-left party questioned the European Union's budget rules,
having prompted a discussion over the need to soften the
Stability and Growth Pact with comments last week.
"Nobody, even in the SPD, wants to meddle with the Stability
and Growth Pact," Gabriel, leader of the Social Democrats, told
Last week, Gabriel - who is deputy chancellor in Angela
Merkel's coalition government - said in France he was open to
debate on giving EU countries more time to meet the bloc's
deficit targets if they committed to reforms.
The government has since been quick to clarify that Gabriel
was not calling for changes to the pact but was pointing to the
flexibility available within the existing rules.
Governments across the EU, including Merkel's, have now
acknowledged that fiscal rules should be applied flexibly to
promote growth, a compromise that has become part of a grander
bargain over who will become the next European Commission chief.
EU heads of state and government meet in Brussels on
Thursday and Friday and will likely decide whether to propose
Jean-Claude Juncker as the next head of the Commission, a choice
opposed strongly by Britain.
Italian is likely not to oppose Juncker any longer following
offers for a gentler interpretation of EU budget rules.
The existing rules allow for slower budget consolidation if
a country makes investments or undertakes structural reforms.
But policymakers worry that more time for deficit cuts may not
bring about the desired effects if it means postponing reforms.
Their concerns were sparked by France, which in exchange for
reform promises was given two extra years until the end of 2015
to bring its budget deficit below 3 percent of GDP.
The reforms did not go as far as expected and France will
struggle to meet even the extended deadline.
"These countries will not get over their structural crisis
without structural reforms. If you keep avoiding them, in the
end you won't succeed," said Gabriel.
"I think Germany is the best example of this," he said,
recalling the "Agenda 2010" economic reforms launched by an
SPD-led government a decade ago which are credited with cutting
Germany's labour costs and making its economy more competitive.
Gabriel added that "the big difference between Germany and
France" was that, while both broke EU budget rules at the time,
Germany responded with tough reforms but France did not.
(Reporting by Annika Breidthardt and Stephen Brown)