Breakingviews | Germany

Considered view

26 Oct 2009 16:11

Vorsprung durch tax cut

Context News

Wolfgang Schaüble, finance minister-designate in Germany's new coalition government being formed by Angela Merkel, the re-elected Chancellor, said the country's economy “needs an impulse” and that he will not be able to balance the budget over the four-year legislative term.

The comments were made in an interview with the Welt am Sonntag newspaper.

Merkel called for E15bn in tax cuts in her election campaign and has since spoken of cuts of E24bn.

Germany’s budget deficit is expected to rise to 4-5% of GDP this year.

The new government is thinking of slashing taxes despite a worsening budgetary position. The approach is right. The Germans need to spend, as US consumers aren’t. The way to make the tax cuts affordable is to trim big government.

Sign up to read the rest of this subscriber-only content, or if you are already a member please sign in here.

Forgotten your password? Get a password reminder.

This Views Flash will shortly be followed by a Considered View