View from City Road: Germans ducking and weaving
Friday 07 May 1993
Part of the difficulty lies in translating the widespread public foreboding about tax increases into hard figures. The German budgetary process is so riddled with hidden items that Finance Ministry statements offer only a sparing insight into the real world.
Undeterred, the Bundesbank has done its sums and come up with a total PSBR for 1993 of some DM230bn, around 8 per cent of GDP (national output). What with the continuing need for massive net transfers to eastern Germany, the financing of the privatisation of the heavily indebted railways, and the burden of rising unemployment, the state's appetite for new funds will remain large. The willingness to adopt radical cuts in other areas is unlikely to grow as Germany heads into the 1994 'super-election year', with nine elections at state, European and finally national level.
Instead, the government is still ducking and weaving with tax increases. The re-introduction of the unification income tax surcharge is planned for 1995, when the government hopes the recession and the election will be memories. This may be wishful thinking. The depletion of reserves at the state pension fund will trigger an automatic increase in contributions of nearly 1 per cent, or DM20bn. Tax increases by another name are already in the pipeline.
The yawning deficit at the Federal Labour Office may also make a rise in unemployment contributions unavoidable. The same will probably be true of fuel taxes, to help finance the railway reform. On top of this come the often astronomical increases in municipal service charges.
The resulting weak prospects for consumption would be less serious if exports, the traditional engine of German recovery, could be relied upon to grow strongly. But with only modest assistance expected to come from abroad, worries about weakened consumption are leading some economists to reverse growth expectations for western Germany next year down towards zero. That in turn means German interest rates may have to stay lower for longer.
Easter egg hunt horror as mother finds dead body under deck of house
Missing Malaysia Airlines Flight MH370: Wreckage could be found within a week as search reaches 'very critical juncture', says minister
Unbeliebable: The White House offer 'no comment' to anti-Justin Bieber petition
Loch Ness Monster found on Apple Maps?
Royal Tour 2014: Is the Duchess of Cambridge the only person ever to climb into a fighter jet wearing a dress and high heels?
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Refugee facing deportation from Sweden saved by fellow passengers refusing to let plane leave
- 1 Easter egg hunt horror as mother finds dead body under deck of house
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Unbeliebable: The White House offer 'no comment' to anti-Justin Bieber petition
- 4 Loch Ness Monster found on Apple Maps?
- 5 How We Met: Alison Moyet & Emma Kennedy: 'I knew we'd be friends because she was happy to make a prat of herself'
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...