–2011 Fed Net Borrow Likely Below E66 Bn
By Thomas Widder
BERLIN (MNI) – German federal net new borrowing this year will
likely amount to “around E70 billion,” markedly below the E80.2 billion
forecast in the 2010 budget, German Deputy Finance Minister Werner
Gatzer told Market News International on Monday.
In 2011, federal net new borrowing will likely sink to “below E66
billion,” said Gatzer, who is responsible for budget matters in the
ministry.
After a two-day government conclave, German Chancellor Angela
Merkel announced at a press conference today a mix of spending cuts,
higher fees and some tax hikes amounting to E13.2 billion in 2011, E19.1
billion in 2012, E24.7 billion in 2013 and E26.6 billion in 2014. The
government aims to cut the budget by an additional E5.6 billion in 2014.
The fiscal consolidation package envisages, among other things, the
introduction of an ecological tax on air travel, a special tax on
nuclear energy as well as lower spending on the unemployed, families and
the military sector. The government does not plan to hike income or
value added tax rates.
The consolidation steps are roughly in line with the requirements
of the country’s debt limitation rule, which requires that the
structural deficit be reduced to 0.35% of GDP by 2016.
Gatzer said the measures likely will have no noticeable negative
effect on economic growth in the country.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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