BERLIN – Germany’s tax revenues will be slightly lower than expected in the coming years because of a recent economic slowdown, but the government is sticking with its target of balancing its budget by 2015.
Through 2017, all layers of the country’s government face a shortfall of 13.2 billion euros ($17.3 billion) on their forecast revenues of 2.7 trillion euros, according to an official forecast. The previous projection was made in November.
Germany’s federal government has an annual budget of some 300 billion euros. Its tax take is expected to fall 1.8 billion euros short of previous predictions both this year and next, but Finance Minister Wolfgang Schaeuble said the projection “is overall a positive result” since tax revenues are continuing to climb, albeit more slowly.
Budget projections will remain unchanged because the shortfall is within the range of normal fluctuation, he added.
“A sustainably balanced budget is within reach,” he told journalists in Berlin. The government plans to take on no new debt from 2015 onward.
Schaeuble — visibly pleased as he presented the figures to journalists in Berlin — took pride in summing up the country’s finances by saying they were “as unexciting as they are reliable.”
The German economy is in better shape than many others in the 17-strong group of European Union countries that use the euro and is believed to have returned to growth in the first quarter. It shrank slightly in last year’s final three months, which Schaeuble cited as the main reason for the lower tax revenue forecast.
The federal government still projects to take on more than 17 billion euros in new loans this year, but plans to gradually reduce that to zero by 2015 before eventually starting to pay back some of its debt — worth about 80 per cent of annual economic output, or about 2 trillion euros.
According to the European Union’s debt criteria, which take into account all layers of government and social security funds, Germany already balanced its budget last year amid a resilient economy, higher tax revenues and significantly lower borrowing costs.
In more upbeat signals for Europe’s biggest economy, industrial production increased by 1.2 per cent in March on the previous month, according to official data.
Economists had forecast that production would decline by 0.1 per cent in March. Instead, the Economy Ministry reported another increase following a 0.6 per cent rise in February — a figure revised upward Wednesday from the initial reading of 0.5 per cent.
Data released Tuesday showed a healthy order pipeline — with industrial orders increasing 2.2 per cent in March following an identical rise in February.
Geir Moulson in Berlin contributed reporting.