Economic crisis

Austerity knocks in Germany too

Published on 8 June 2010 at 11:31

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Yesterday, the very day EU finance ministers approved the €750 billion stabilisation mechanismfor the eurozone as well as peer review of member state budgets, chancellor Angela Merkel presented the biggest austerity plan in German postwar history: the target is to save €11.2 billion in 2011, and €80 billion by 2014. Berlin aims to trim the defence budget (- €4 billion by 2014) and impose new taxes on profits in the nuclear energy sector and on airfares for flights departing from Germany. But the deepest cut is in social security spending (- €29.5 billion). The Frankfurter Rundschau stressesthat the first victims will be families, the poor and companies: "The bulk of the population would support the consolidation of public finances – provided that the plan seems credible and the burdens are distributed fairly. This plan does not satisfy either of those demands,” observes the paper, particularly in view of the recent tax breaks for the hotel sector. The conservative paper Die Welt, on the other hand, says the retrenchment plan doesn’t go far enough, as it fails to make the huge reduction in the public deficit by 2016 required under a new clause in the constitution.

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