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German cabinet approves debt-free 2015 budget

German cabinet ministers have approved a 2015 budget that gets by without any new borrowing, thus marking the nation's first balanced budget since the end of the 1960s, based on strong tax revenue.

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German tax revenue to increase

German Chancellor Angela Merkel's grand coalition government on Wednesday approved the Finance Ministry's draft budget for next year.

It lives up to a pledge to do without any fresh borrowing in 2015, the first balanced budget in the country in almost half a century, after fresh loans of 6.5 billion euros ($8.89 billion) in the current fiscal year.

The government said it foresaw tax revenue rising from 268 billion euros to 278 billion euros next year, providing some leeway for badly needed investment in selected areas.

Berlin stated it would put more money in education, research and transport infrastructure, pushing up spending to almost 300 billion euros.

Squaring the circle?

"To consolidate the budget and at the same time take measures to crank up the economy is no contradiction in itself," the Finance Ministry said in a statement.

It mentioned that it would also have enough leeway to free up resources with a view to easing the financial pressures of communities and some of the nation's 16 states.

It's the government's long-term objective to decrease Gremany's overall debt load to 70 percent of gross domestic product by the end of 2017, down from 76 percent at present.

Opposition leaders had repeatedly accused Finance Minister Wolfgang Schäuble of basing the draft budget on a number of shaky assumptions, such as the persistence of record-low interest rates and a rise of growth-driven tax revenue.

hg/cjc (Reuters, AP, dpa)

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