BERLIN — Germany’s government must do more to cut spending to get its deficit under control as the economy is weakening faster than earlier expected, the country’s panel of independent economic advisers said last week.
Germany’s economy, the continent’s biggest, will grow by only 0.8 percent next year as Europe’s debt crisis weighs on its outlook, the experts predicted.
The government last month lowered its own 2013 growth forecast from 1.6 percent to 1 percent. It expects 0.8 percent growth this year.
In its annual report, the group maintained recent plans by Chancellor Angela Merkel’s coalition government to increase social welfare spending ahead of next year’s national elections “go in the wrong direction” given the signs of financial trouble ahead.
“We need significantly more ambition in consolidating the budget,” Christoph Schmidt, the group’s chairman, told reporters after handing over its nearly 400-page annual report to Merkel. The government must show more spending discipline as the outlook is worsening, he added.
Merkel’s government has defended the plans, saying that even with the increased spending the country will have an almost balanced budget as early as 2014.
Business, Pages 77 on 11/11/2012