The German cabinet has approved a draft budget for 2010 which includes borrowing an additional 40 billion euros to fight the country’s deepest post-war recession.
Finance Minister Peer Steinbrueck said that was one time deal. He also criticised those German politicians who are promising tax cuts in the run-up to September’s general election: “Given the new record borrowing and the decrease in tax revenues, it is highly reckless to promise tax cuts. And if I see it correctly, this debate will determine the election campaign.” Steinbrueck said the additional borrowing will take next year’s federal budget to 86.1 billion euros and the budget deficit will likely reach six percent of GDP next year. That is twice the limit set by EU budget rules. The minister stressed Germany has to get back on to the economic straight and narrow as soon as the crisis is over or risk losing its AAA credit rating.