Germany to boost spending in the years ahead | Business| Economy and finance news from a German perspective | DW | 13.03.2015
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Germany to boost spending in the years ahead

The German government is planning to increase public spending in the years until 2019. But while investments in infrastructure and education are to rise steadily, Berlin will not stray from its balanced budget policy.

As part of a supplementary 2015 budget to be discussed by the cabinet next Wednesday, the German government plans to increase spending by 4.2 billion euros ($4.5 billion) to 302.6 billion euros this year.

According to details leaked to the press Friday, the increase would include 3.5 billion euros for a special investment fund to support financially weak local communities. A relevant draft makes it clear, though, that Berlin will not give up on its pledge not to take on any fresh debt.

The government, led by Chancellor Angela Merkel, was able to present a federal budget in the black in 2014, a year earlier than originally planned. That was seen as a boon for Berlin, which had preached budget discipline to its eurozone partners.

Assuming a steady flow of revenues

The medium-term spending plan also assumes that a balanced budget can be achieved throughout 2019, with increased spending to be more than offset by bigger tax revenues.

For 2016, the government has penciled in a 3.3-percent surge in spending to 312.5 billion euros, with the budget to continue growing until reaching 334 billion euros in 2019.

Most of the extra money to be made available will go into infrastructure improvements, including Internet expansion programs, but 8.3 billion euros have also been earmarked for foreign aid between 2016-2019.

Germany has long come under international pressure to do more for global growth by loosening its purse strings and raising public spending.

hg/bk (AFP, Reuters)

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