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Germany

German cabinet passes strict budget for 2011

The German government has passed a reduced budget for 2011, which sets spending at over 307 billion euros ($385 billion). It includes 11 billion euros in cuts to bring down the country's deficit.

money locked up

Cuts are likely to affect social and family services

With controversial cuts to social and family services, the 2011 budget was approved by the German cabinet on Wednesday.

The budget sets total spending at 307.4 billion euros ($385 billion).

As part of a strict austerity program set out by Chancellor Angela Merkel's government, the budget reduces public spending by 11 billion euros, a 3.8 percent decrease over 2010.

The government, a coalition of Merkel's Christian Democrats (CDU) and the pro-business Free Democrats, wants to further cut spending down to 301 billion euros by 2014.

Finance Minister Wolfgang Schaeuble is aiming to reduce Germany's new borrowing to 57.5 billion euros in 2011, down from 65.2 billion euros this year.

Schauble defended the cuts as he presented the plans Wednesday, saying there was no other alternative to tightening the purse strings.

"(With this budget) we are on a path that will reduce deficits that are too high," the minister said.

Volker Kauder, chair of the CDU parliamentary group in the Bundestag, said German debt had to be reduced "because high debt is part of the problem we have in Europe, and that goes for all European states."

Budget hurts 'weak'

The opposition Social Democrats (SPD), meanwhile, have attacked the budget plans, with Thomas Oppermann, secretary of the SPD parliamentary group in the Bundestag, saying the cuts would only effect the "socially weak."

He cited the scrapping of pension subsidies for the long-term unemployed as evidence of a budget that represented a "bitter socio-political hardening."

Deputy SPD chairperson Manuela Schwesig said the savings package would further aggravate child poverty because recipients of unemployment benefits would no longer receive parents' allowances.

The budget is the latest chapter in Merkel's drive to consolidate public finances. The austerity measures and cuts are likely to be unpopular, with the center-right ruling coalition coming under attack from opposition parties for unfairly targeting the poor.

Trade unions have promised stiff resistance and industrial action looks likely.

The plans will now go before parliament before the end of November.

Author: Darren Mara, Catherine Bolsover (dpa/AFP/Reuters)
Editor: Michael Lawton

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