Germany’s economy is showing more signs of recovery. The Finance Ministry said tax revenues in July were 11.5% higher than the same month last year.
Economists have forecast that consumer spending will increase later this year as Germans buy goods to avoid having to pay higher Value Added Tax when it goes up from 16% to 19% at the start of the new year.
German Finance Minister Peer Steinbrueck said an anticipated two billion euros more in federal tax means he will be able to to cut borrowing.
The president of the Bundesbank president Axel Weber said German economic growth of 2% is “possible” this year.
In the last five years, Europe’s biggest economy has relied on exports to grow with domestic spending weak because of high unemployment.
The Finance Ministry said it believed the recent acceleration in wage tax growth could be a sign that the economic recovery has reached the labour market.