{"id":118344,"date":"2021-03-24T14:43:44","date_gmt":"2021-03-24T14:43:44","guid":{"rendered":"https:\/\/precoinnews.com\/?p=118344"},"modified":"2021-03-24T14:43:44","modified_gmt":"2021-03-24T14:43:44","slug":"german-government-backs-new-budget-as-scholz-signals-spending-spree","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/german-government-backs-new-budget-as-scholz-signals-spending-spree\/","title":{"rendered":"German government backs new budget as Scholz signals spending spree"},"content":{"rendered":"

BERLIN (Reuters) – Finance Minister Olaf Scholz promised on Wednesday to do whatever was needed to enable Germany to spend its way out of a coronavirus-induced economic slump, as the government backed an extra budget that will lift new borrowing to a record high.<\/p>

Slideshow ( 5 images )<\/span><\/figcaption>

Approval by Chancellor Angela Merkel\u2019s cabinet of the 60 billion euro ($71 billion) supplementary budget will raise this year\u2019s net borrowing figure to more than 240 billion euros.<\/p>\n

Scholz underlined Berlin\u2019s readiness to continue massive deficit spending as Europe\u2019s largest economy struggles to contain a third wave of COVID-19 cases.<\/p>\n

\u201cWe will continue to do whatever is necessary. That\u2019s expensive – but doing nothing would lead to even higher costs,\u201d he told journalists during a budget presentation.<\/p>\n

\u201cMore tests and more vaccinations are the key instruments now to get us out of this crisis,\u201d Scholz said, raising hopes that Germany should soon be able to speed up its so far relatively slow vaccination programme.<\/p>\n

Scholz also proposed a draft budget for next year with net new debt of 81.5 billion euros, for which parliament would have to suspend for the third year running a debt brake that limits new borrowing to 0.35% of gross domestic product.<\/p>\n

The new plans mean that Germany\u2019s overall pandemic-related borrowing could exceed 450 billions euros from 2020 to 2022.<\/p>\n

Scholz, who is running as the centre-left Social Democrats\u2019 candidate to become chancellor in September\u2019s federal election , said Germany would try to \u201cgrow out of its debt\u201d by reducing its debt ratio with a hopefully robust economic recovery.<\/p>\n

But he said more fiscal measures would probably be needed and this should include a fairer tax system – a clear reference to his party\u2019s election campaign pledge to increase taxes for the rich.<\/p>\n

The question how Germany should reduce its debt pile over the coming years while maintaining high public investment is likely to be one of the most heated topics of the election campaign.<\/p>\n

Scholz\u2019s medium-term budget plans envisage a return to the constitutional debt brake and, with it, limited deficit spending from 2023.<\/p>\n

The increased spending means that Germany\u2019s debt-to-GDP ratio will rise from below 60% in 2019 to around 75% this year – still the lowest among G7 countries.<\/p>\n

($1 = 0.8455 euros)<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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