Germany Tax Revenue Projection Steady as Economic Growth Slows
Europe’s biggest economy has enjoyed uninterrupted growth since 2009.
(Bloomberg) --
German tax revenues are to remain relatively robust even as Europe’s largest economy slows down, according to the latest government projections.
For this year the government increased its projected tax collection by 4 billion euros from its May estimate to a total of 328.2 billion euros, according to the Finance Ministry’s autumn projection. The government cut its forecast for next year’s income by only 200 million euros to 328.6 billion euros ($365.1 billion).
“We’re in a position to carry out our budget plans in coming years without any changes,” Finance Minister Olaf Scholz said, adding that he expected faster economic growth in 2020 than this year.
Europe’s biggest economy has enjoyed uninterrupted growth since 2009. But the pace of expansion has slowed to an estimated 0.5% this year from 2.5% only two years ago. Uncertainty over global trade and Brexit are the main culprits.
Slowing revenue and increased spending, particularly on the government’s recently-launched climate plan, could still make the government’s budget proposal look tight and fuel a growing debate over its budget policy.
Chancellor Angela Merkel and Scholz are sticking to their policy of no-deficit-spending, but are facing increasing pressure from some business leaders and leftist legislators in their coalition to loosen the purse strings and take on new debt.
The planned issuance of green bonds would replace expiring government debt but not increase its net liabilities, Scholz said. The new papers were designed to meet growing investor demand for climate financing.
Members of the Social Democrats, the junior coalition partner, plan to challenge the government on the balanced budget in its 2020 proposal. Government parties will review the bill in a special committee on Nov. 14, and vote on it in parliament at the end of that month.
To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net
To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Raymond Colitt, Andrew Blackman
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