Government spending, borrowing up in 2009

Government spending, borrowing up in 2009
The last budget debate gave Steinbrück pains. Photo: DPA
A draft 2009 budget passed late Thursday by a committee from Germany's lower house of parliament would allow Berlin to spend and borrow more than other budgets proposed by Chancellor Angela Merkel's Grand Coalition government.

The Bundestag’s budget committee wants to allow the government to borrow €18.5 billion next year as the German economy grinds to near-standstill and dole out €290 billion, 2.4 percent more than in 2008.

In his budget, Finance Minister Peer Steinbrück had kept borrowing at €10.5 billion while Merkel’s cabinet wanted to cap spending at about €288 billion. The various proposals agree that the government should invest about €27 billion next year.

The proposal was hammered out in a marathon session by members of the government’s coalition government and is expected to see little resistance when the lower house reviews the budget later this month.

Budget specialist Carsten Schneider, from the left-leaning Social Democrats (SPD), said the proposal was “appropriate” but admitted the budget must be balanced in the mid-term. “It would be wrong to save going into a crisis,” he said.

His counterpart in the conservative CDU agreed, though he admitted to mixed feelings. “It’s the right thing in a difficult environment,” he said.

The new budget comes after the government ratcheted down its estimate for tax income next year by €4.6 billion due to slowing global economies. The budget committee expects a tax haul of €244.1 billion in 2008, €4.6 billion less than earlier prognoses. Additional income has been pegged at €27.4 billion.

The biggest differences between the committee’s budget and other proposals arise in how the cash is divvied up. The Transportation Ministry would get an additional €1 billion next year while the Family Ministry would enjoy an additional €124 million than in 2008.