With a six-month delay, the German parliament on Friday approved the grand coalition's budget for 2006. New borrowing for the current year is at the highest level ever seen in a federal budget.
Steinbrück (l.) is spending the most on Franz Müntefering's labor ministry
After five days of debate over the budget put forward by Finance Minister Peer Steinbrück, the 261.6 billion euro ($327 billion) package passed with an easy majority in the Bundestag.
On the final day of debate, Steinbrück defended his plan against the opposition's criticism, saying there was no alternative. But with new borrowing totals for the current year at 38.2 billion euros -- the highest level ever seen in a federal budget and some 7 billion euros more than last year -- Steinbrück's package was not without controversy. Germany will now almost certainly run afoul of the European Union's rules on budget deficit levels for the fifth year in a row.
"The 2006 budget is a transition budget, also with respect to developments in economic growth," Steinbrück said.
He added that the true test of Merkel's coalition government would come with the 2007 budget, in which he foresees new borrowing being drastically reduced to around 20 billion euros.
Big spending on labor
The budget was late because of the closeness of Chancellor Merkel's election victory
Unsurprisingly perhaps, given Germany's ongoing struggle to rein in unemployment and reform its welfare system, the biggest single item in the budget is 119.5 billion euros earmarked for the Ministry for Labor and Social Affairs.
This is followed by 27.9 billion euros for the Defense Ministry, and 23.7 billion euros for infrastructure and transport projects.
The budget was six months late in being approved this year because of the long wait to form a new government following last September's extraordinarily close election results.