The new budget relies on about €100 billion in borrowing to plug gaps in the governments finances.
“We are in the worst economic crisis of the post-war period, we have a reduction in gross domestic product of five percent, which is unprecedented since the founding of the Federal Republic of Germany,” Schäuble told broadcaster Deutschlandfunk.
The new debt will help finance increased spending and tax cuts, as well as job market benefits and subsidies for the country's healthcare system that are all “necessary and right,” Schäuble said. But he cautioned the record borrowing was a “one-time” solution.
He also said that the crisis had not had quite the devastating effect on the job market that had initially been feared.
The debt-ladened budget is the first for Chancellor Angela Merke's new centre-right coalition made up of her conservative Christian Democrats and the pro-business Free Democrats.