Once Europe's shining example of fiscal responsibility, Germany is caught in a downward spiral of poor growth and rising debt, making it one of the European Union's worst budget deficit sinners. The situation has become so dire for Europe's largest economy that Berlin wants a revamp of the EU's 'stability and growth pact' to loosen fiscal policy. It is a humiliating climbdown for the country that pushed for the pact - designed to underpin the economic foundations of the euro - to ensure EU members like Italy and Greece would not sabotage the currency with famously profligate ways. But German Finance Minister Hans Eichel is unable to escape the fiscal quagmire. 'We have to refrain from doing anything that could hinder the recovery,' Mr Eichel told the German parliament last week, reiterating his intention to put off budgetary consolidation in favour of borrowing and spending to boost growth. Mr Eichel, known as 'Iron Hans' for his commitment to fiscal discipline, has become a symbol of Berlin's fiscal fall from grace. Last autumn he led efforts to spare Germany from disciplinary proceedings for flouting the EU's budget rules and he backs proposals to sell part of the country's gold reserves to increase funding for education and research. With Germany on course to breach the stability pact's limit on deficits, capped at 3 per cent of gross domestic product, for the third consecutive year, some fear Mr Eichel's latest comments signal thrift is being replaced by spending largesse. 'I agree with the government that you can't save your way out of a deficit crisis - you've got to have growth,' said Juergen von Hagen, an economist at the University of Bonn. 'But you're not going to solve things with more spending. Germany's problem is its massive tax burden.' Professor von Hagen said the EU should be willing to accept higher deficits in exchange for structural reforms and tax cuts, but was dismissive of Berlin's inclination to loosen the eurozone's budgetary rules. Instead, he said the stability pact needed to be reworked so national governments were no longer responsible for supervising themselves. Other European governments that have kept to the EU's fiscal guidelines are calling for changes to the stability pact. Austrian Finance Minister Karl-Heinz Grasser suggested countries with ballooning deficits could lose EU voting rights for a limited time. 'This pact has no future as it is. It has lost its credibility. Created by Germany, it has in a similar fashion been buried by Germany,' he said.