Money ministers warn of hard times to come

Money ministers warn of hard times to come
Doh! Photo: DPA
Just one week ahead of national elections, both Germany’s finance and economy ministers warned of hard times to come after the vote on a Sunday night political talk show.

On ARD’s show “Anne Will,” Finance Minister Peer Steinbrück from the centre-left Social Democrats said the national budget will be tight.

“In the next year, if I remain finance minister, I will have to take on €100 billion in new debt instead of the planned €6 billion,” he said, adding that he therefore sees no realistic way to promise tax cuts as Chancellor Angela Merkel’s conservative Christian Democrats (CDU) and the pro-business Free Democrats (FDP) have during the election campaign.

Meanwhile Economy Minister Karl-Theodor zu Guttenberg from the CDU’s Bvarian sister party, the Christian Social Union (CSU), said it would be a “big task” to fill the budgetary gap.

“We won’t be able to delay saying that it will be a hard year,” he said. “We will have to do without one or two comforts.”

On Monday the Finance Ministry reported that tax revenue for August – excluding municipal taxes – sank by 9.9 percent compared to the same month last year.

The Federal Statistics Office (Destatis) also reported on Monday that public debt has increased by 5.7 percent since the end of 2008.

Meanwhile the head of the Bundesbank, Germany’s central bank, said Monday that the country would not recover from the financial crisis for another four years.

“The German economy will not reach the level of prosperity it enjoyed in 2008 until, probably, 2013,” Bundesbank President Axel Weber said in an interview with daily Frankfurter Rundschau.

“And the road up will be bumpy,” he said.

Nevertheless, he said the phase of “free fall” was behind Germany, which was hit especially hard by a slump in global demand as its economy is highly dependent on exports.

This year, output is set to shrink by between five and six percent, Chancellor Angela Merkel, seeking re-election on Sunday, said recently.

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