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Will other nations follow German lead?

Wednesday, July 02, 2014 - 02:04

Germany's Finance Minister presents his budget for 2015 and a financial outlook until 2018. Joanna Partridge asks if the euro zone's top economy has got anything to worry about?

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No new debt in 2015. That's the plan approved by Germany's cabinet. It will be the first time it's avoided new net borrowing since 1969. Wolfgang Schaeuble is Finance Minister. SOUNDBITE: Wolfgang Schaeuble, German Finance Minister, saying (German): "With a sound budget we are in line with a decent economic development and we are in a good situation where we have the possibility to do justice to our responsibility in the years to come in this election period." In its three year financial plan, Berlin expects its debt as a percentage of GDP to fall from nearly 80% to under 70%. Low unemployment and steady growth have produced record tax revenues. While rock bottom interest rates have eased the financial burden of servicing its federal debt, estimated to be 1.3 trillion euros. The government hopes to cover an estimated 300 billion euros of spending next year without issuing new bonds. Germany weathered the euro zone crisis better than its neighbours - and has steamed ahead as Europe's engine since. Even if the most recent manufacturing data showed growth slowed slightly in June, while unemployment also unexpectedly rose. Berlin also faces other challenges, such as increasing domestic consumption, says Jane Foley from Rabobank. SOUNDBITE: Jane Foley, Senior Currency Strategist, Rabobank, saying (English): "There's a lot of pressure on Germany from international countries to try and boost a lot of domestic activity in Germany, to see more consumption domestically and that of course should be good for the whole of the euro zone to help adjust some of the imbalances. Whether or not that's successful of course is difficult in Germany. It's still considered to be a country full of savers, but generally if we compare Germany to the rest of the euro zone activity in Germany has been pretty good. So I think this budget should go down without too many ripples in Germany or abroad." Schaueble was asked in a news conference if Germany was now an example to other countries. He said he's campaigning in Europe and around the world to show growth and sound fiscal policy are inevitably linked. Given Germany's latest budget, other countries may well look to their lead.

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Will other nations follow German lead?

Wednesday, July 02, 2014 - 02:04