So far, only Italy, Spain and Finland have applied for a seven-year extension.
“The possibility of extending the adjustment period from four to seven years is currently being discussed,” said a German finance ministry official.
For years, Germany’s position as Europe’s industrial powerhouse had shielded its economy, allowing it to emerge as the champion of fiscal discipline in the bloc. But this week the strain of a deeper-than-expected recession forced Berlin to miss its Oct. 15 deadline to submit a multi-year spending plan to the European Commission.
As of the rules’ implementation in April, Brussels requires countries with relatively low debts such as Germany to cut the ratio between public debt and growth by an average of at least 0.5 percent per year.
Meeting this requirement in only four years would require a major fiscal adjustment from Germany’s fractious and unpopular center-left government.
A seven-year adjustment plan, however, spares it from having to impose overly onerous spending cuts ahead of national elections slated for Sep. 2025.
