Leading economics experts have predicted a serious German budget crisis from next year if the issue of spending is not addressed.
Their remarks come as the budget committee of the Bundestag, the lower house of parliament, early on Friday approved a provisional 2027 federal budget after nearly 16 hours of negotiations.
The budget foresees new debt, including loans from special funds, totalling around €210 billion ($231.5 billion).
Spending in the core budget rises to a record €561 billion, while net borrowing climbs to almost €123 billion in the core budget alone.
“This budget policy cannot be sustained in the long term,” Clemens Fuest, president of the Ifo Institute in Munich, told the Sunday edition of The world newspaper, saying spending priorities had to be established
“All other spending should be frozen or, if possible, cut,” Fuest said, adding that tax rises would be inevitable if this did not happen.
Jens Boysen-Hogrefe of the Kiel Institute for the World Economy (IfW Kiel) sees things similarly.
“Owing to economic fluctuations and special effects, there may be some breathing room in individual years, but the trend is clearly negative,” he said, owing to the fact that the population is aging while interest payments are rising.
“Additional levies are likely even with strong spending discipline,” he said.
Ansgar Heveling, the president of the Bundesrechnungshof, the federal audit court that monitors financial management by the government, called on the coalition government to do make more effort to consolidate the budget.
Noting that every third euro spent by the government is financed by borrowing, he said it was clear that it was living beyond its means, and warned that the share of interest spending in the federal budget would double by 2020.
Source: www.dw.com
