'It got a very, very positive reception when discussed in the central bank council,' Theo Waigel, the Finance Minister, said. He attended the fortnightly meeting of the Bundesbank's decision-making council yesterday morning, and presented the government's proposals to cut public spending by DM20bn ( pounds 8bn).
However, the Bundesbank's leaders left Mr Waigel in no doubt that his parallel decision to increase borrowing by DM10bn to DM53bn this year was acceptable only on condition that the savings programme was 'implented in its essentials'.
The bank's determination to stick to its restrictive monetary course has in large part been due to its wish to force the Bonn government to restore discipline to its fiscal policy.
Yesterday's central council meeting left Germany's high interest rates untouched, strengthening the view that the Bundesbank was waiting for concrete action from the government, as well as from the unions in their wage negotiations, before taking a decision on dropping leading rates.
But expectations of a quick result from Bonn were dimmed by Mr Waigel. He said he hoped to get cabinet approval for the savings package in early March, and that this would be followed by a 'hard struggle' to push it through parliament.Reuse content