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6 July 2018
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Germany government (The Total Investment & Insurance Solutions)
The German government says its 2019 budget will comply with eurozone
debt limits for the first time in 17 years. The Total Investment & Insurance Solutions
The draft budget also raises defense spending
— a contentious issue between Germany and U.S. President Donald Trump.
Finance Minister Olaf Scholz told a news
conference that debt would fall to 58.25 percent of yearly economic output.
That would put it below the 60 percent limit established by rules to ensure
fiscal responsibility and price stability in the 19 countries that use the
euro. The Total Investment &
Insurance Solutions
The debt burden has fallen as the economy has
grown and the government has run balanced budgets. And eurozone governments
have been able to save on borrowing costs in recent years thanks to stimulus
efforts by the European Central Bank that have included very low interest rates
and purchases of government bonds. The
Total Investment & Insurance Solutions
But the tight budgets have drawn criticism
that the government of Chancellor Angela Merkel has neglected investment needs
and skimped on defense spending. At 1.3 percent of gross domestic product,
defense outlays remain below NATO members' target of 2 percent by 2024. Germany
has committed to raising its defense spending toward the NATO guideline after a
period of shrinking expenditure. The
Total Investment & Insurance Solutions
The defense spending by NATO allies promises
to be a contentious issue at an upcoming NATO summit on July 11-12 after Trump
again pressed allies to raise their spending commitments. The Total Investment & Insurance
Solutions
Germany's defense budget is getting an 11
percent yearly increase, Defense Minister Ursula von der Leyen was quoted as
saying by the newspapers of the Funke media group. She said that "Germany
has strong arguments in that regard" ahead of the summit. The Total Investment & Insurance
Solutions
The eurozone debt rules have a checkered
history since the currency was introduced in 1999. They have been widely
breached but enforcement turned out to be weak. The average government debt
level in the eurozone was 86.7 percent of GDP last year, with France's at 97
percent and Italy's at 132 percent. After the 2010-2012 debt crisis, the rules
on debt were backed up with a treaty limiting deficits. The Total Investment & Insurance Solutions
The draft budget will be taken up by the
parliament in the fall.The Total
Investment & Insurance Solutions
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