World Economy

Merkel Offers €10b to Counter EU Critics

Merkel Offers €10b  to Counter EU Critics
Merkel Offers €10b  to Counter EU Critics

Chancellor Angela Merkel’s government proposed extra investment spending of 10 billion euros ($12.4 billion) starting in 2016 as her euro-area allies press Germany to do more to boost growth in Europe.

Germany’s latest tax-revenue forecast, released Thursday, opens leeway for additional domestic spending while allowing Europe’s largest economy to stick with Merkel’s goal of balancing the budget next year for the first time since 1969, Bloomberg quoted Finance Minister Wolfgang Schauble as saying.

“I will propose to the coalition cabinet that, in the course of planning the 2016 budget and the mid-term finance plan, we make available an additional 10 billion euros over that period,” Schauble said at a news conference.

With Europe facing slower growth, Merkel is under pressure from European peers and international organizations to boost spending. At the same time, she’s committed to the balanced budget that was part of her re-election platform last year.

Schaeuble said Merkel approved the spending proposal and that details will be worked out during the 2016 budget drafting process. The aim is to contribute to European Commission President Jean-Claude Juncker’s pledge to craft a 300 billion-euro investment program to spur growth in the European Union, he said.

Germany’s construction industry association welcomed the announcement, saying about 5 billion euros of the extra funding would flow into roads. That will help reduce “a massive backlog of investment in public infrastructure,” the Hauptverband der Deutschen Bauindustrie group said.

  Production Rises

German industrial production rebounded less than analysts forecast in September, signaling that Europe’s largest economy is struggling to recover.

Production, adjusted for seasonal swings, rose 1.4 percent from August, when it contracted a revised 3.1 percent, the biggest decline since January 2009, the Economy Ministry in Berlin said Friday. Economists surveyed by Bloomberg News predicted a 2 percent increase in output. Production declined 0.4 percent in the third quarter.

Manufacturing output increased 1.7 percent in September after dropping 4.2 percent in August, with production of investment goods up 4.5 percent.

“Momentum in the industry is constrained by a continuously difficult international environment,” the economy ministry said. “There are no noteworthy impulses in the short term.”

At the same time, exports surged 5.5 percent in September from the previous month, marking the biggest increase since May 2010, the Federal Statistics Office in Wiesbaden said.