German cabinet approves spending hike without new debt
Published Mar 20, 2019 05:23AM ET
German cabinet approves spending hike without new debt
BERLIN (Reuters) - The German cabinet on Wednesday passed a draft budget for 2020 that calls for a 1.7 percent spending hike and relies on ministries to cut costs to avoid new debt in light of an economic slowdown, a government official said on Wednesday.
Finance Minister Olaf Scholz's fiscal room for maneuver is getting tighter because tax revenues are likely to come in lower than expected this year as exporters are hit by weaker foreign demand, trade disputes and Brexit uncertainty.
A government official said that the cabinet approved Scholz's draft budget plan for 2020 and the mid-term financial planning until 2023.
The draft foresees spending of 362.6 billion euros, but sources have said ministries will have to identify total spending cuts of 625 million euros each year, with program delays and other measures to contribute additional savings.
The draft budget foresees a further increase in military spending in 2020 but does not provide a plan for how to reach the NATO target of spending 2 percent of economic output on defense in the years beyond.
Military spending would rise by 2.1 billion euros over a previous plan for 2020, boosting the share of defense spending to 1.37 percent of gross domestic product from 1.25 percent in 2018 and 1.3 percent this year.
The military budget is slated to rise to 45.1 billion euros in 2020 from planned spending of 43.2 billion this year. But the share of military spending would drop back to 1.25 percent in 2023, with any further spending increases to be negotiated year by year, sources have said.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.