German budget deficit to hit 2.5 percent in 2011

Germany plans to bring its budget deficit down to 2.5 percent of gross domestic product this year, well under the European Union ceiling of 3 percent, according to a report in a news magazine released on Saturday. Citing financing plans to be agreed by the cabinet in mid-April, Der Spiegel magazine said the deficit was then projected to fall progressively to 2 percent in 2012, 1.5 percent in 2013, 1 percent in 2014 and 0.5 percent in 2015.
Germany's budget deficit widened in 2010 to 3.3 percent of GDP, but plans to reverse that have been helped by a faster than expected recovery from the country's deepest recession in the post-war period in 2009. GDP grew 0.4 percent in the last quarter of 2010 versus the previous quarter, its seventh consecutive quarterly expansion. Spiegel said the deficit reduction plan made possible by the recovery could make room for the tax cuts, "especially for the middle- and lower-income brackets", which Chancellor Angela Merkel's coalition promised in the 2009 election campaign.