Germany to cut new net borrowing in 2014 - report

BERLIN Sun Mar 10, 2013 12:19pm GMT

German Finance Minister Wolfgang Schaeuble pauses during a Reuters interview in Berlin February 27, 2013. REUTERS/Tobias Schwarz

German Finance Minister Wolfgang Schaeuble pauses during a Reuters interview in Berlin February 27, 2013.

Credit: Reuters/Tobias Schwarz

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BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble aims to cut new net borrowing next year much more deeply than envisaged thanks to a buoyant economy, Der Spiegel said on Sunday, citing government sources.

The magazine said that Germany's new net borrowing could fall to between 6 billion euros (£5.23 billion) and 8 billion euros because of higher tax revenues, less than half the 20.7 billion euros budgeted for in the government's medium-term plan.

The finance ministry declined to comment on the figures but confirmed that talks were under way with various government ministries on spending plans for 2014.

The exact level of the new net borrowing will hinge on the outcome of talks with big-spending ministries such as health, transport and international development, Der Spiegel said.

Germany posted record tax revenues last year, allowing the government to cut its deficit to less than 0.35 percent of gross domestic product - a key target in its longer-term economic programme - four years ahead of schedule.

Europe's largest economy has proven remarkably robust during the euro zone's sovereign debt crisis and unemployment is near two-decade lows.

The German economy shrank 0.6 percent in the last three months of 2012 but is expected to avoid recession, defined as two successive quarters of contraction, and regain momentum this year.

The situation in Germany, which has pushed the rest of the euro zone to embrace tough austerity measures to reduce debt, contrasts sharply with that of recession-mired southern periphery nations such as Greece, Italy and Spain.

Der Spiegel also said that a draft of the International Monetary Fund's (IMF) annual economic outlook, to be published next month, would confirm that Germany achieved a balanced budget last year.

But the IMF will also urge Germany to reverse a fall in investment to support long-term growth, the paper said. ($1 = 0.7703 euros)

(Reporting by Gernot Heller and Gareth Jones; Editing by David Goodman)

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