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Germany’s budget deficit tumbles

17 January 2012 No Comment

Robust economic growth and higher tax revenues slashed the German budget deficit to nearly three times less than originally forecast.

The federal government’s deficit tumbled to 17.3 billion euros ($21.40 billion), compared with the 48.4 billion euros it had initially expected, according to official figures released overnight.

Finance Minister Wolfgang Schaeuble had said during the course of the year that it could hit 30 billion euros while his ministry just weeks ago corrected the figure down to around 20 billion euros.

The German government cited the strength of Europe’s top economy and the labour market in particular as highly auspicious factors for the country’s fiscal health.

The 2011 budget shows ‘‘that budgetary consolidation and growth are twin siblings who get on extremely well together,’’ a top finance ministry official, Steffen Kampeter, told reporters.

Germany’s public deficit fell to just 1.0 per cent of gross domestic product (GDP) last year, the federal statistics office announced Wednesday, after hitting 4.3 per cent in 2010, bringing it back below the 3.0-per cent ceiling set by the EU.

Berlin had pledged to bring its deficit below that limit in 2013 and the figures underlined the widening gulf between Germany’s prospects and those of the crisis-wracked members of the 17-country eurozone.

However, Kampeter said Germany’s outlook for 2012 was cloudier due to diminished economic growth projections, with the budget deficit expected to reach 26.1 billion euros.

Official data released Wednesday showed that the German economy grew by 3.0 per cent in 2011 but the eurozone debt crisis brought it almost to a halt in the final months of the year.

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