–2010 Federal Net New Borrowing Might Be Below E50 Bln

BERLIN (MNI) – German federal tax revenue growth slowed markedly in
November, according to data released Monday by the Finance Ministry in
its monthly report.

Federal tax revenues in November were 0.9% higher on the year after
a 12.7% annual rise in October. The strong October result was due to
higher returns from joint federal and state taxes as well as markedly
lower transfers to the EU.

For the January-November period, federal tax revenue was down 2.0%
on the year, trending slightly below the full-year projection for a
decline of 1.9%.

Total tax revenue excluding local taxes was 2.5% higher on the year
in November after +3.0% in October. For the first eleven months of the
year, total tax revenue (ex-local taxes) was up 0.2% compared to the
same period a year ago, trending slightly above the full-year forecast
for stagnating tax revenue.

Federal revenue — tax intake plus other income — was down 2.5% on
the year in the January-November period, trending markedly above the
full-year projection in the 2010 budget for an annual drop of 7.3%.
Federal expenditures in the same period were up 2.9% on the year,
significantly below the full-year forecast of +9.3%.

“From the current stand, a net new borrowing amount of less than
E50 billion seems possible” this year, the ministry said.

In the economic section of its report, the ministry noted that
Germany is benefiting from a broad-based upswing. “Current economic data
signal that the expansion in economic activity will continue in the last
quarter of the year,” it said.

With recent survey data signaling a slowdown in exports, domestic
demand be of growing importance, the ministry said. Industry is expected
to remain on an upward trend, while private consumption should recover
further in the fourth quarter.

Turning to price developments, the ministry noted that some
indicators are pointing to a further moderate CPI trend. Upward
pressure from wages on inflation is currently unlikely, the ministry
reasoned. However, in the further course of the economic upswing, price
increases along the production chain are likely to passed on, at least
in part, to consumers, it reckoned.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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