German Cabinet approves 2021 budget with high borrowing
Thursday, 09 24 2020, Category: Economy, Country: Germany
Germany's Cabinet on Wednesday approved a 2021 budget that foresees significant borrowing for the second consecutive year as Europe's biggest economy tries to lessen the fallout of the coronavirus crisis.
The budget plan calls for spending of 413.4 billion euros ($485 billion) next year, down from this year's exceptionally high 508.5 billion euros, a figure which was swollen by spending on rescue packages.
The crisis has derailed the government’s dedication to keeping its budget balanced, long a point of pride. After six years in the black, it is borrowing 217.8 billion euros this year to finance rescue and stimulus packages and cover an expected shortfall in tax revenue.
“We know that the pandemic isn’t over yet,” said Finance Minister Olaf Scholz, noting that the government plans to borrow a further 96.2 billion euros to cover next year's extra spending.
“We can return to times in which we don't have to take on so much extra credit,” Scholz said. “We did that before the crisis, and ensured that debt was reduced in relation to economic output, and we will do so again in the future.”