In an interview with daily Bild, Schäuble did not reveal how he would make savings or where the government might cut spending, but said an austerity programme was unavoidable.
“We have to lower the structural deficit from 2011 by about €10 billion a year,” he said. “That is difficult, but we have to manage it. By July we will pull together the appropriate package.”
Last week, Chancellor Angela Merkel's cabinet approved the 2010 budget, which involves taking on a record €85.8 billion in new debt next year.
Many economists have expressed doubt that the government's gamble – creating a significant deficit to stimulate the economy and hopefully boost tax revenues through growth – will pay off.
Still, the upper house of the federal parliament, the Bundesrat, last week passed the government's €8.5 billion tax cut package. Merkel's junior coalition partners, the pro-business Free Democrats, favour even more tax cuts in the near future.
Schäuble admitted he was concerned about the great debt burden Germany was taking on.
“But it's also true that if I can make a contribution to ensuring that we overcome the worst economic crisis in the post-war period without serious damage to people's lives, then I can live with it,” he added.