Thursday, September 30, 2004

Germany's deficit just grows and grows

When asked if she knew who created her, the little slave girl Topsy in Uncle Tom’s Cabin said : “I ‘spect I growed.” And that is all German politicians seem tosay about the country’s deficit. We ‘spect it growed.

The Finance Minister Hans Eichel has explained that low tax receipts and high unemployment benefits mean that “fiscal plans will have to be adjusted accordingly”. He said this just after giving blood at a Red Cross event in Berlin, some might say appropriately.

Next week’s cabinet meeting will approve a supplementary budget whereby the government will be authorized to borrow 43.4 billion euros (c£29.75 billion) as opposed to the previous target of 29.3 billion euros (c£19.9 billion). This will be the highest deficit for Germany since the war.

Needless to say, Germany will post a deficit well above the allowed limit of 3 per cent. To sweeten the pill, the Commission has admitted that altogether 6 countries are likely to do so.

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