BERLIN (Reuters) - Germany faces a 25 billion euro (22.19 billion pounds) budget shortfall by 2023, unless it tightens spending, as tax revenues are set to fall and public sector wages are on the rise, Bild newspaper reported, citing an internal government document.
The prospect of budget deficits would represent a dramatic deterioration in the finances of Europe's biggest economy, which reported a 11.2 billion euro budget surplus last year.
The warning came in a report prepared by Finance Minister Olaf Scholz to his ministerial colleagues as they prepare for a regular budget planning discussion.
Trade tensions between China and the United States and the possible impact of a disorderly British exit from the European Union have already prompted Germany to slash its growth forecast for this year to 1 percent as a decade-long boom in Europe's economic powerhouse draws to a close.
In this tougher environment, a lower tax take will tear a 5 billion euro hole in the budget each year, Bild reported.
A 25 billion euro shortfall would mean a budget deficit of less than 1 percent of Germany's current gross domestic product.
Still, Bild added that ministries were warned at a budget planning meeting last week to keep costs under control, partly because of the rapid growth of the government wage bill, which is expected to swell to 35 billion euros in 2020, from 31 billion euros in 2016.
(Reporting by Thomas Escritt; Editing by Susan Fenton)
