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Germany to cut spending by 80b euros through 2014: Merkel

(Xinhua)
Updated: 2010-06-07 23:58
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BERLIN: Germany's cabinet agreed to slash the federal budget by 80 billion euros ($95 million) through 2014, setting an example to those debt-laden eurozone countries, Chancellor Angela Merkel announced on Monday.

"What happened in last few months showed, related with Greece and other euro countries, the overriding importance of consolidated budgets," Merkel told reporters after a two-day cabinet session at the chancellery. "Solid finances are the best form of crisis prevention."

In pursuing the large-scale budget cuts, the German government planed to reduce aid funds to parents, place an "environmental" levy on air travel, slash public sector jobs and to restructure the purchasing system of the armed forces, Merkel said.

The project of building a replica of a Prussian palace, German emperor's old palace in central Berlin is also to be postponed by three years, as a measure of budget cuts.

German officials said that the total budget cuts would add up to 81.6 billion euros from 2011 to 2014.

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As many eurozone countries, notably Greece, Spain and Portugal, faced heavy public debt, which triggered panic and speculation in global markets and caused the euro's stunning fluctuation in recent weeks, Merkel has been urging her European partners to rein in their spending and take quick and firm actions on budget cutting in next years.

"Growth cannot come at the expense of high deficits, but that growth must be generated in a sustainable fashion," Merkel said Saturday when meeting with Russian President Dmitry Medvedev.

"Germany has the outstanding chance of setting a good example," she added on Monday.

Germany's budget deficit in 2009 reached 3.3 percent of GDP (Gross Domestic Product), breaching the euro zone limit of 3 percent. Analysts expected the deficit would exceed 5 percent this year.

A government statement said that Merkel's cabinet decided to meet the European Union deficit threshold by 2013 at the latest.

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