Weber urges spending cuts by German govt

Read Axel Weber's speech at his official inauguration as Bundesbank President

"Today's budget gaps would be significantly smaller had the government estimated its revenues more conservatively and pursued its expenditure consolidation targets more rigorously," Weber said at a ceremony attended by Finance Minister Hans Eichel to mark his appointment to the Bundesbank helm.

He said some reform initiatives have failed because government and opposition could not reach a consensus.

"In the interests of our country I appeal to those who carry the political responsibility to urgently agree on the cornerstones for a sustainable consolidation strategy," Weber said.

"German fiscal and economic policy must face up to the challenge of quickly dismantling the high deficits, improving conditions for economic growth through sustainable reforms and preparing social security systems for future burdens." The most pressing fiscal issue is to reduce the public deficit below 3 pct of GDP in 2005, Weber said.

"Here, potential is above all to be found in government expenditure, which is too high," he said.

"The pact should provide for solid public finances in the EU. It is not (doing so) at the moment. This does not require any changes to the pact, but rather to the will of all member states to abide by the agreed rules," he said.