Germany to end 2019 with big budget surplus that then shrinks, paper reports

Germany's huge public sector surplus for 2019 will be expected to shrink rapidly next year and then decline further. — Reuters pic
Germany's huge public sector surplus for 2019 will be expected to shrink rapidly next year and then decline further. — Reuters pic

BERLIN, Dec 5 — Germany is on track to end 2019 with a big budget surplus, which will shrink sharply next year due to government plans to help families, Handelsblatt newspaper reported yesterday, citing a government document.

This year's public sector surplus from federal, state and local authority funds will dip to €39.5 billion (RM192.7 billion) from €45.3 billion in 2018, according to the document to be presented to a federal and state government budget meeting on December 13.

The surplus will shrink to €4.5 billion in 2020 and further thereafter, Handelsblatt reported, citing plans to partly abolish a “solidarity tax,” introduced after 1990 German reunification, and to ease the financial burden on families.

The budget surplus is a subject of hot debate in Germany.

A new leftist leadership of the Social Democrats (SPD), junior partners in Chancellor Angela Merkel's government, wants to drop Germany's strict fiscal rules on borrowing and its commitment to a balanced budget to pay for increased investment.

This would break a taboo for many conservatives. Even SPD Finance Minister Olaf Scholz, who lost the leadership contest, has so far stuck to fiscal rigour. — Reuters