Ten of the 25 EU member states were in breach of the EU stability pact last year, fresh Eurostat figures have revealed, while the EU's statitistical office implied Germany had played tricks with its budget figures.
The EU's stability and growth pact - the rules underpinning the euro - stipulate that member states' budget deficits may not exceed the limit of 3 percent of GDP.
But Eurostat reported the highest deficits in Greece (6.6%), Hungary (5.4%), Malta (5.1%), and Cyprus (4.1%).
All of the big member states except Spain ran a deficit between three and four percent, with Poland (3.9%) and Germany (3.7%) among the highest, followed by France (3.6%), Italy (3.2%) and the UK (3.1%)
In overall terms, government deficits in the EU decreased from 3.0 percent in 2003 to 2.6 percent in 2004, however.
Denmark, Finland, Estonia, Sweden, Ireland and Belgium all recorded a budget surplus.
Meanwhile, the German government received an implicit rebuke from Brussels as Eurostat made it clear that it does not accept German finance minister Hans Eichel's attempt to massage figures.
Mr Eichel booked in the sale of outstanding accounts to the two formerly state-owned big German telecom and postal firms as budget-reducing measures, but Eurostat rejected the move.
The news means the German deficit is likely to hit four percent of GDP this year, German media report.
But Berlin said it will stick to its own calculations, describing the Eurostat view as merely "an opinion".
Meanwhile, the financial firm Standard & Poors has said Germany may lose its top credit rating, according to Die Welt.