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Uncertainty Germany can reach debt goal

Tuesday, September 02 15:28:31

It is not yet certain Germany can refrain from any net new borrowing in 2015 as set down in its draft federal budget, a senior lawmaker from Chancellor Angela Merkel's Christian Democrats (CDU) said today.

Norbert Barthle, budget committee leader for the CDU, warned that official data on Monday showing a federal surplus of 4 billion euros in the first half of 2014 - Germany's first since 1991 - was just a preliminary result.

Reports about surpluses running into the billions ignored the role of one-off effects or the fact this surplus was already factored in, he said. He also warned that crises abroad could have negative economic effects.

The Bundesbank's billions in profit, a shrinking interest burden and high employment were key factors in the surplus.

"Even if the first half of this year went well for Germany as a whole and for the federal government, no one should be misled: this is a pleasing intermediate result which does not give any scope to spend more in the coming year," Barthle said after a meeting of the ruling coalition's budget experts.

"We have not reached our goal yet," he said, adding the government would, however, do everything it could to put a stop to net new borrowing next year.

Germany is under pressure from European partners like France and Italy to spend more to help bolster economic growth and job-creation in Europe and allow greater fiscal leeway.

Barthle said the 2015 budget would undergo changes in parliamentary consultations and would be adjusted to reflect economic developments and current political events.

But he said: "If there are opportunities to increase investment, we will take them."

In the first half of the year Germany's overall budget surplus, which groups federal, state and local governments and the social security system, was the biggest since reunification.

The finance ministry expects 6.5 billion euros of net new borrowing in 2014 but plans no net new borrowing next year for the first time since 1969. (Reuters)

For more visit www.businessworld.ie