Angela Merkel has clearly been deaf ear to all those who recommended him not to take the path of fiscal consolidation as fast as required by the debt reduction mechanism enshrined in the Constitution in 2009. The German Chancellor, notwithstanding the appeal of the U.S. Treasury Secretary Timothy Geithner, for example, in fact yesterday presented a multi-year savings plan.
The 2011 budget should certainly provide savings sum relatively moderate 11.2 billion euros compared to 2010, or 0.4 of GDP. But, in 2012, the cursor should rise to 19.1 billion euros of savings from the same year of reference, to 24.7 billion the following year, and EUR 26.6 billion in 2014. If it combines all of these efforts, we can speak of a plan of rigour of more than 81 billion euros over four years.
Angela Merkel used the Greek crisis to justify its strict discipline. "The last few months have shown the critical importance of sound public finance", she said, adding that public accounts in order are "the best form of prevention." With its plan, Berlin also wants to ask as a model of budgetary orthodoxy in a seriously destabilised euro area.
The German effort however will not go through with tax increases. Tracks still evoked last week to increase some of VAT reduced rates or increase the "solidarity tax" has been abandoned.
The staff of the army reduced
Additional revenue will come from for example of a new tax on the nuclear fuel that will have to pay the operators of the reactors - some 2.3 billion euros per year. Airlines, will be, subject to a new levy on tickets at the start of the Germany. And Deutsche Bahn will pay its public shareholder. Finally, the Chancellor expressed optimistic of introducing a tax on financial transactions.
From spending, as expected, education, research and pensions are spared. Angela Merkel insisted on the need to not crop "on investments which will be the growth of the future". However, the social field is strongly involved - the terms of compensation to the unemployed long term will be cured. The Minister of defence will work in a very substantial reduction in numbers of Army (perhaps 40,000 people about 250,000). Infrastructure projects are pushed back. The reconstruction of the Palace of the Hohenzollern of Berlin, which was scheduled to begin in 2011, is postponed until at least 2014. The administration will have to remove some 15,000 jobs by 2014.
The opposition student voice
The Social Democrats have criticized the measures announced. Their former leader, the Minister-President of Rhineland-Palatinate, Kurt Beck, found that the Government "is obviously not associate senior returned to the operation of consolidation". The pattern of the Union Verdi j. that the Government "puts pressure only the weakest."
The Finance Bill should be formally adopted in August, before being transmitted to the Parliament, where the opposition already has promised a "massive" resistance
President Sarkozy, who was to meet Angela Merkel yesterday evening to prepare the next international deadlines, had to cancel his visit for timetable reasons. It will be able to deliver its comments orally.
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