Germany plans 100 billion euros in new debt - Der Spiegel

FILE PHOTO: German Finance Minister Olaf Scholz addresses the media during a news conference in Berlin, Germany May 14, 2020. Michael Sohn/Pool via REUTERS

BERLIN (Reuters) - German Finance Minister Olaf Scholz plans a supplementary budget in late summer, which could involve taking on 100 billion euros (89.09 billion pounds)in extra debt in order to compensate for collapsing tax revenues, Der Spiegel magazine reported on Friday.

Germany’s economy slumped in the first quarter at its steepest rate since 2009 with worse expected by mid-year, but it is weathering fallout from the coronavirus better than other EU states where outbreaks have been more disruptive.

The 2.2% drop in quarter-on-quarter output was the widest since the financial crisis of a decade ago and the second biggest since German reunification in 1990.

The economic slowdown has had a dramatic impact on forecast tax take. On Thursday, a Finance Ministry document predicted that tax revenues on all state levels would come in 98.6 billion euros lower than previously projected.

Der Spiegel said the new debt would drive the budget deficit to over 10% this year, its highest level since the Federal Republic’s founding in 1949. It added that about 50 billion euros of this would go to the economic stimulus package planned for the second half of this year.

The Finance Ministry declined to comment on the report.

Reporting by Thomas Escritt, additional reporting by Christian Kraemer; Editing by Michelle Martin