German Balanced-Budget Push Aided by ECB in Boost for SchaeubleBrian Parkin
Lawmakers from Chancellor Angela Merkel’s bloc said record-low interest rates will reduce federal debt servicing by 1.52 billion euros ($2.07 billion) this year, helping balance Germany’s budget in 2015.
Members of the budget committee in Germany’s lower house, or Bundestag, also voted to defer 400 million euros of defense spending and 500 million euros for education to avoid increasing the planned 2014 budget deficit, according to parliamentary documents published today.
Finance Minister Wolfgang Schaeuble’s plan to end net new government borrowing by Europe’s biggest economy got an additional boost when the European Central Bank cut its benchmark rate to a record 0.15 percent from 0.25 percent yesterday. Schaeuble’s goal was threatened after a German court ordered the government in April to return about 2.2 billion euros in nuclear fuel-rod taxes to utilities.
“The whole budget is built on solid foundations,” Norbert Barthle, the budget spokesman for Merkel’s Christian Democratic bloc, told a news conference today. Recalculating the interest on the national debt “is a justifiable step,” he said.
To help trim the draft budget’s deficit, lawmakers also voted to incorporate a November 2013 tax revenue forecast that estimates higher federal revenue than a review in May.
“The budget is truly unsound,” lawmaker Sven-Christian Kindler of the opposition Greens party said by phone. “It relies on chance and sleight of hand. Schaeuble should cut Germany’s long list of tax subsidies.”
Before committee members made the amendments in an overnight sessions, tax reimbursements for utilities and other outlays threatened to raise net new federal borrowing this year to about 9.9 billion euros from 6.5 billion euros.
The final draft foresees spending of 296.5 billion euros and debt servicing of 28.3 billion euros. It will be put to a floor vote by the end of June, according to a statement by the parliamentary news service.