Recession blows hole in German budget

Recession blows hole in German budget
Photo: DPA
The recession has blown a €316 billion hole in Germany's budget for the next four years, new government forecasts showed Thursday.

Tax receipts for the federal government, Germany’s 16 states and local authorities, will be €572 billion in 2009 – €45 billion less than the last estimate of six months ago, the finance ministry predicted.

It cut its forecast for income in 2010 by €84.7 billion to €595.2 billion, for 2011 by €93.4 billion to €620 billion and for 2012 by €93.2 billion to €645.3 billion.

On the outgoings side, Chancellor Angela Merkel’s government is also having to increase massively public spending to pay benefits to the 3.6 million Germans now of out of work.

In common with other countries, Berlin is also pulling out all the stops to give Europe’s biggest economy a shot in the arm with two stimulus packages worth a total €80 billion in an effort to halt its worst postwar slowdown.

The result is a budget deficit, for the federal government alone, of around €80 billion this year, more than double the previous biggest overspend of €40 billion in 1996, according to government sources.

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