No balanced budget for Germany, says minister

Germany will not be able to balance its budget over the next four years because stimulating economic growth will take priority, said designated Finance Minister Wolfgang Schaeuble.

Schaeuble, a veteran from Chancellor Angela Merkel's conservatives, said Germany could only start reducing its debt when the economic crisis was over.

"No one can say that the crisis is already behind us," said Schaeuble, whom Merkel officially designated as finance minister on Saturday, when she sealed a coalition deal with the business-friendly Free Democrats.

"Therefore, we have to do everything to stop the decline in economic growth and to recover as soon as possible," he said.

Asked whether it was utopian to expect a balanced budget in the foreseeable future, Schaeuble said: "Clearly yes, in the current legislative period. It is ambitious enough simply to stick to the constitutional debt brake."

A new "debt brake" law will force the government to make substantial reductions in new borrowings from the year 2011.

"It makes no sense to talk about savings measures, at a time when you are having to push through stimulus measures," he told Welt am Sonntag newspaper.

"We will see where we will save, step for step, depending on how the economy evolves," he said.

Schaeuble was a surprise choice for finance minister, having indirectly criticised Merkel's election campaign pledge to pursue billions of euros in tax cuts by saying there was little room for them given Germany's strained finances.

Schaeuble, in a wheelchair since he was shot and nearly killed by a mentally ill man in 1990, is seen as an independent-minded politician who will not shy away from pressing his views.

In the interview, however, he said the tax relief promised in the new coalition deal was "well justifiable, even for me".

"I am in favour of seeing the first impulses implemented already at the start of next year," he said.

Economists and the media have expressed scepticism about the new government's ability to finance its tax plans, especially in light of a budget deficit swollen by €81 billion (Dh446bn) in stimulus steps pushed through by Merkel's outgoing "grand coalition" to combat the crisis.

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