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Germany to end 2019 with big budget surplus that then shrinks - paper

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By Reuters
Germany to end 2019 with big budget surplus that then shrinks - paper
FILE PHOTO: German Finance Minister Olaf Scholz, who lost his bid for the leadership of the Social Democratic Party (SPD), is pictured in Saarbruecken, Germany, September 4, 2019. REUTERS/Ralph Orlowski   -   Copyright  Ralph Orlowski(Reuters)
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BERLIN (Reuters) – Germany is on track to end 2019 with a big budget surplus, which will shrink sharply next year due to government plans to help families, Handelsblatt newspaper reported on Wednesday, citing a government document.

This year’s public sector surplus from federal, state and local authority funds will dip to 39.5 billion euros from 45.3 billion in 2018, according to the document to be presented to a federal and state government budget meeting on Dec. 13.

The surplus will shrink to 4.5 billion euros in 2020 and further thereafter, Handelsblatt reported, citing plans to partly abolish a “solidarity tax”, introduced after 1990 German reunification, and to ease the financial burden on families.

The budget surplus is a subject of hot debate in Germany.

A new leftist leadership of the Social Democrats (SPD), junior partners in Chancellor Angela Merkel’s government, wants to drop Germany’s strict fiscal rules on borrowing and its commitment to a balanced budget to pay for increased investment.

This would break a taboo for many conservatives. Even SPD Finance Minister Olaf Scholz, who lost the leadership contest, has so far stuck to fiscal rigour.

(Writing by Paul Carrel, Editing by William Maclean)