German chancellor Angela Merkel said her government would stick to its austerity programme and said a record federal deficit of €80 billion this year meant there was no scope to relax.
In an interview with German TV ARD broadcast this morning, Mrs Merkel also dismissed criticism that Germany is not doing enough on economic stimulus measures. She said Germany spends about 2.1 per cent of its gross domestic product to reinforce economic growth.
Mrs Merkel said the government would stick to its austerity programme even though some leaders of her junior coalition partners, the Free Democrats, have called for tax relief.
"We'll enact the measures that we've agreed upon," Mrs Merkel said. "I believe we should not let up."
Mrs Merkel said a federal deficit of €80 billion deficit this year in a budget totalling €320 billion made it imperative to continue looking for ways to reduce the deficit.
"€80 billion in a budget of €320 billion - it would benefit everyone if we can save another €10 billion next year if the economy picks up," she said, pointing out that would cut interest costs for future generations.
"I think one should be pleased with that but not let up as far as structural cost-cutting is concerned," she said.
Mrs Merkel said she had told US president Barack Obama in a phone call that Germany has done much to support economic growth with stimulus measures. Despite the austerity programme, she said Germany has done much to support a recovery.
"Germany is doing much more in 2010 for the worldwide economic recovery than (other countries) on average," she said.
Economy minister Rainer Bruederle had said yesterday that tax cuts the centre-right government agreed in a 2009 coalition deal were only delayed recently and not cancelled.
Mr Bruederle, a member of the FDP, called for tax cuts for middle income wage earners before the end of the current legislative period that concludes in 2013.
Germany has launched its biggest programme of fiscal cutbacks since World War Two and finance minister Wolfgang Schaeuble has said it does not have the leeway to carry out major tax reforms during the current legislature.
But there has been dissent within Mrs Merkel's coalition over the €30 billion in savings over the next four years on welfare and slashing thousands of federal government jobs.
Reuters