Germany will post another budget surplus
Print Edition
While politicians in the US argue about spending cuts, deficits and the debt ceiling, Germany faces a different discussion: What to do with a looming budget surplus.
The country’s strong economy means it will take in more in tax revenue than it will spend next year for a third straight year, a group of top economic institutes said in a report yesterday.
The report urged the government to put the surplus to good use and suggested investing in education and scientific research. The government could also give taxpayers a break by eliminating so-called bracket creep, the institutes said. Bracket creep is when inflation pushes taxpayers into higher tax brackets.
The German government will run a surplus of 0.1 percent of economic output this year and 0.3 percent next year — or 7.7 billion euros (US$10.5 billion) after taking in 1.257 trillion euros and spending 1.249 trillion euros. Germany also had a small surplus in 2012.
Germany will continue to run surpluses to 2018, if tax and spending practices remain the same, the report said, reaching 1.5 percent of GDP. Provisions of Germany’s constitution require, however, some of that money be used to start paying down debt.
The economists forecast debt as a percentage of annual economic output would drop from 81.2 percent last year to 61 percent by 2018. That is close to the 60 percent debt ceiling required on paper by the European Union for the 17 nations that use euro currency, although the limit has been widely violated.
The report trimmed the German growth forecast for next year to 1.8 percent from a predicted 1.9 percent in April.
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