German budget shies away from cuts by Hugh Williamson in Berlin
The German cabinet will on Wednesday endorse a 2006 budget that breaks the European Union's fiscal rules for the fifth year in a row, amid criticism that Angela Merkel’s coalition government is failing to meet its own target to cut spending.The €262bn draft budget allows for a deficit of 3.4 per cent of GDP, exceeding the 3 per cent threshold specified in the EU's stability and growth pact. The Bundesbank and opposition politicians have attacked the grand coalition for not fulfilling its pledge to treat budget consolidation as a key policy priority. Peer Steinbrück, finance minister, said that many savings measures were being postponed until next year in order not to jeopardise Germany's fragile economic recovery.
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