German 2020 budget plan calls for 1.7 percent boost in spending: sources

0
60
© Reuters. 50 and 20 Euro banknotes are displayed in this picture illustration© Reuters. 50 and 20 Euro banknotes are displayed in this picture illustration

BERLIN (Reuters) – The German government’s budget plan for 2020 calls for a 1.7 percent hike in spending to 362.6 billion euros and relies on ministries cutting costs to avoid incurring new debt given forecasts for slower , Finance Ministry sources said on Monday.

The plan assumes that Europe’s largest economy will grow by 1.0 percent in 2019, down from an initially projected 1.8 percent, the sources said.

The Economy Ministry last week said the economy had a subdued start to 2019 and probably grew moderately in the first quarter, its outlook dampened by trade conflicts and sluggish demand for industrial products among other factors.

To balance the budget, government ministries will have to identify combined spending cuts of 625 million euros each year, with program delays and other measures to contribute additional savings, the sources said.

Article continues below Advertisement...

In a move that could anger U.S. President Donald Trump, the budget foresees a further increase in military spending in 2020 but does not provide a plan for how to reach the NATO target of spending 2 percent of economic output on defense.

The ministry sources said military spending would rise by 2.1 billion euros over a previous plan for 2020, boosting the share of defense spending to 1.37 percent of gross domestic product from 1.25 percent in 2018 and 1.3 percent this year.

The military budget is slated to rise to 45.1 billion euros in 2020 from planned spending of 43.2 billion this year, a separate government source said.

However, the share of military spending would drop back to 1.25 percent in 2023, with any further spending increases to be negotiated year by year, the sources said. “We’re taking one step at a time,” said one of the sources.

That leaves Germany well below the 2 percent target set by NATO members for 2024, and below the 1.5 percent share that Germany has pledged to meet by that date.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, ) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com