The German Cabinet has approved next year’s federal budget. It includes cuts in government borrowing and a plan to balance the budget by 2011. Finance Minister Peer Steinbruck said there are signs that the current “favorable growth” will carry over into coming years.
Germany’s net new borrowing next year will decline to 12.9 billion euros, that is the lowest level since 1989, while federal spending is due to rise by 4.7%. The projection is for the budget deficit to fall from 27.9 billion euros last year to 19.6 billion this year going to zero 2011.
Berlin has repeatedly breached EU deficit limits in the recent past. The finance minister rejected calls for the budget to be balanced sooner. Steinbruck said “I’m not going to make any promises I can’t keep” and he added the government strategy is to “first stimulate growth and then consolidate.”