Germany Increases Social Spending Before Election
BERLIN - Germany’s ruling center-right coalition has decided to increase childcare benefits, spend more money on transportation projects and end an unpopular medical charge less than a year before a general election, officials said Monday.
The measures - costing more than €3 billion ($3.9 billion) per year - come at a time when German Chancellor Angela Merkel and her Finance Minister Wolfgang Schaeuble are urging other European nations to rein in spending and cut back public debt.
The opposition Social Democrats decried the new measures as expensive presents to voters before next year’s poll in which Merkel will stand for a third term. "Mrs. Merkel and Mr. Schaeuble preach the Europeans to drink water, but at home they are having wine," center-left party leader Sigmar Gabriel said.
But Economy Minister Philipp Roesler, who is also the vice chancellor, defended the decisions, saying the parties have also pledged to achieve an almost balanced budget as early as 2014. This sets a "signal of stability and solidity" amid Europe’s three-year-old debt crisis, he added.
Germany, Europe’s biggest economy, overcame the slump of the 2008-2009 financial crisis with two years of strong growth. The country has so far also weathered Europe’s sovereign debt crisis that has hard-hit several of the bloc’s southern nations such as Greece, Portugal or Spain.
While growth in Germany is expected to fall to around 1 percent this and next year, the government has reported record tax revenues, enabling the country to reduce new borrowing without pushing through any major budget cuts.
Coalition leaders agreed to increase spending on transportation infrastructure by €750 million ($958 million) next year. They also scrapped an unpopular €10 ($13) charge that most patients must pay in addition to their health insurance when visiting a doctor - a cut worth about €2 billion ($2.56 billion).
Furthermore, the coalition agreed to press ahead with a controversial new childcare benefit that will go to parents who stay at home with their young children instead of work. According to earlier finance ministry estimates, it will cost about €400 million next year, then about €1 billion ($1.28 billion) annually starting 2014.