EU states warned of deficit 'disaster'

GERMANY - A senior Bundesbank official has criticised EU member states who have run up huge budget deficits and now demand a relaxation of the terms of the Growth & Economic Stability Pact which puts strict limits on government borrowing.

Jurgen Stark, vice president of Germany's central bank, warned that any weakening of the pact "would send a disastrous signal to the markets and would trigger increased volatility and greater instability" of the euro.

He warned that interest rates might have t