The German government will record its biggest post-war budget deficit this year as the economic crisis sends tax revenues plummeting, Peer Steinbrück, finance minister, said yesterday.
Mr Steinbrück admitted the federal deficit would exceed €50bn ($68bn) in 2009 and rise to €90bn next year, more than twice the previous record of €40bn set in 1996 as Germany was absorbing the huge cost of its reunification. In contrast, the federal deficit last year was only€11.9bn.
The figures, based on official tax revenue forecasts released yesterday, makes it clear Germany will breach the European Union's fiscal rules by a wide margin this year and next. Berlin expects the economy to contract by 6 per cent this year in the sharpest contraction since the “great depression” of the 1930s.