Germany to increase spending by €10 billion

Germany to increase spending by €10 billion
Finance Minister Wolfgang Schäuble in the Bundestag on Thursday. Photo: DPA
UPDATE: Germany's federal, state and local governments will take in a combined €6.4 billion less than expected in tax in 2015, but will increase spending by €10 billion.

Between 2015 and 2018 receipts will be €21 billion lower than government tax assessors had forecast at their last meeting in May, the Ministry said.

But Finance Minister Wolfgang Schäuble told  the Bundestag on Thursday that the government would increase spending by €10 billion from 2016 without increasing government debt.

The federal government will take the smallest hit of any level of the administration at around €500 million in 2015, which may still leave room for Schäuble to achieve his cherished goal of a balanced budget next year.

"We are sticking to what we agreed and what we promised" on the balanced budget, Schäuble told MPs.

He said that the coalition's "strict spending discipline" would give the government enough margin for the extra spending in future.

The assessors said that the weakening state of the economy since May was to blame for their less confident forecast.

Government forecasts suggest that the economy will grow by 1.2 percent in 2015 and 1.3 percent in 2016.

But there was no prospect of a collapse in tax takings as the labour market, salaries and consumption continued to grow.

Tax income would continue to be at record levels each year, the experts said.

"We'll make it to the balanced budget in 2015, even if we have to deal with lower tax income," Norbert Barthle, lead Christian Democratic Union (CDU) budget expert in the Bundestag, told the Rheinische Post on Thursday.

He noted that Germany was being asked to pay less into the EU budget than had been anticipated.

Free Democratic Party (FDP) leader Christian Lindner told dpa that "the data from the tax assessors should be a stop sign for [Chancellor Angela] Merkel and [Vice-Chancellor Sigmar] Gabriel".

He said that the coalition government had failed to stop a decline in investment and increased bureaucracy, slowing the economy.

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