The EU Commission has voted to recommend formal warnings to Germany and Portugal for "serious slippages" in their public deficits, which are approaching the euro-zone ceiling of 3 per cent of output, Economic and Monetary Affairs Commissioner Pedro Solbes said.
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"Under the circumstances, we have no alternative but to press ahead with early warning," he told a press conference. "If we do not act at this point, the credibility of the euro-zone stability and growth pact would be called into question."
Both countries are running deficits far over estimates and approaching the pact's limit of three percent of gross domestic product (GDP).
But the unprecedented warnings, which must be approved by EU finance ministers at their Ecofin meeting next month, would be particularly humiliating for Germany, the EU's largest economy, which was largely responsible for the stability pact.
Mr Solbes said the issuance of early deficit warnings by the Ecofin council would be "an important step in process of budgetary surveillance".
He added: "However, the significance should neither be misinterpreted nor over-dramatised.
"An early warning should not necessarily be construed as criticism of the member state's strategy...It could be expressed as a concern...regarding the member state's failure to meet budgetary targets."
AFP