Chancellor Gerhard Schroeder said today that Germany could achieve the European Union's three per cent deficit target provided there were no further economic disruptions in the event of a war in Iraq.
In an interview with Sternmagazine, Mr Schroeder also rejected any speculation he would quit and turn over the reigns to his popular Economy Minister Mr Wolfgang Clement. His Social Democrats were trounced in two recent state elections and his popularity has slumped badly.
"There's no reason for that," Mr Schroeder said, adding his goal was to stay in office through 2006. "First of all that's what I want and secondly, I will do it."
In the Sterninterview, excerpts of which were released in advance of today, Mr Schroeder was quoted saying the three per cent deficit target can be reached "as long as there are no further declines as a result of a war in Iraq."
Mr Schroeder also said he sees the EU Stability Pact's three per cent deficit limit as a flexible target.
"The EU Commission has also, of course, given up the very formal view of this limit," Mr Schroeder is quoted telling Stern.
He said the EU Commission had acknowledged that in certain economic situations state investments could not be cut to meet deficit targets.
Commission President Romano Prodi called the deficit rules stupid last year before backing changes to make them more flexible.
Mr Schroeder said that if there is further economic slowing because of a war in Iraq "then we will have certainly have new discussions" with Germany's EU partners about the deficit limit.