Germans must prepare for tough times to cut deficit: minister

24th April 2010, Comments 0 comments

Germany's Finance Minister Wolfgang Schaeuble warned Germans to prepare for drastic economic measures over the next few years to get control of public finances, in a magazine article to appear Monday.

Part of the solution to the problem of Germany's budget deficit is "to reduce spending or else let it increase only very slightly," he said in the magazine Focus.

Schaeuble said that 2011 will be "a difficult year but not yet the most difficult. The mechanism of reducing the debt will make life harder year after year," he told the magazine.

He added however that "people will find our programme fair."

"Polls show that there is much less support for lowering taxes than there is for people's desire to pay off the heavy indebtedness," the conservative minister said -- even though his liberal coalition partners in government want tax cuts.

Germany's budget deficit is forecast at 80.2 billion euros (107.3 billion dollars), about six percent of gross domestic product this year. Schaeuble has pledged to get it back down to the eurozone limit of three percent of GDP by around 2013.

Europe's biggest economy is counting on growth to generate jobs, boost tax revenues and refill the state's coffers. Germany is recovering from its worst recession in more than six decades, with output shrinking by five percent in 2009.

While a viciously cold winter is expected to have frozen growth in the first quarter of 2010, the German economy as a whole is projected to grow by 1.4 percent this year, according to recently published government forecasts.

Among the signs of recovery, business confidence in Germany rose sharply to a near two-year high in April, the closely watched Ifo index showed Friday.

© 2010 AFP

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