Germany sees deficit within EU limits in 2011

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Germany said on Friday it was "confident" that its deficit will fall within EU limits in 2011, the first major economy in the eurozone to do so since the global recession of 2009.

"We are confident that we will reach three percent (of gross domestic product (GDP)) next year," spokesman Steffen Seibert told a regular government briefing. "Our efforts have paid off."

The deficit -- the difference between government spending and state income -- is expected to be around 4.5 percent of GDP this year, the spokesman added, thanks to a strong economic recovery in Europe's biggest economy.

Other countries among the 16 nations using the euro single currency are faring less well, and are struggling to repair their public finances after being buffeted by the global downturn in 2009.

Spain and France have both forecast a deficit of six percent of GDP in 2011 and Italy 3.9 percent, according to their governments.

European governments are also faced with ageing populations, hitting tax receipts as the working population shrinks and increasing their pensions bill as more and more people take retirement.

Germany's six leading economic institutes this week more than doubled their forecast for growth this year to 3.5 percent, the strongest expansion since European Union records began, according to EU statistics.

This followed, however, a 4.7-percent decline in output in 2009, Germany's sharpest drop since World War II, as demand for its all-important exports fell around the world.

© 2010 AFP

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