Germany’s Franz Urges No Tax Cuts, Low Wage Demands, WiWo Says

July 2 (Bloomberg) -- Wolfgang Franz, head of German Chancellor Angela Merkel’s council of economic advisers, said the government shouldn’t cut taxes and urged labor unions to keep wage increases moderate, WirtschaftsWoche reported, citing an interview.

“Budget consolidation must have absolute priority,” Franz was quoted as saying. “Germany is facing several additional expenses as a result of the energy turnaround and potentially of a rescue of ailing euro countries.”

While productivity gains and inflation would allow wage increases of 2 percent this year and 2.5 percent in 2012, labor unions and employers should keep pay increases lower, Franz said, according to the magazine.

To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net.

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net