THE German government yesterday denied reports that Germany might be excluded from Europe's currency union, the euro, for breaching its budget targets, but officials admitted more cost-cutting was needed to ensure EMU entry.

"Only the tax estimate, to be released in May, will present new clarity about fiscal affairs," a finance ministry spokesman said, brushing off a report in the newspaper Welt am Sonntag that Germany was close to exceeding its borrowing budget for 1997 of 53.4 billion deutschmarks (£20.1 billion).