BERLIN: Angela Merkel’s conservatives have backed away from a campaign pledge to use future budget surpluses to pay down German debt, as they search for new sources of revenue to fund billions of euros in investments sought by their likely coalition partner.
On the campaign trail, Merkel repeatedly highlighted plans by her Christian Democrats (CDU) to begin paying down Germany’s ¤1.3 trillion debt pile from 2015 as a sign of fiscal responsibility. But days before a first round of coalition negotiations with the centre-left Social Democrats (SPD), one of her top deputies made clear that this was no longer a firm goal.
“What is firm is that we are saying we don’t want any new borrowing from 2015,” CDU General Secretary Hermann Groehe said after a meeting of party leaders in Berlin.
“Everything else will depend on the big picture, on economic developments and other factors.”
Merkel’s policy shift is likely to be welcomed by Germany’s European partners, who have urged Berlin to loosen its purse strings.
The hope is that this will boost domestic demand, leading to a rise in German imports from struggling southern euro zone members and easing trade imbalances in the 17-nation currency bloc. Reuters