BC-EU--Germany-Financial Crisis, 3rd Ld-Writethru,0369
Germany moves to save $96 billion by 2014
AP Photo SOB108
BERLIN (AP) -- Germany will cut welfare benefits, introduce new taxes and shed government jobs to save as much as euro80 billion ($96 billion) through 2014 and set an example to the rest of Europe, Chancellor Angela Merkel said Monday.
The wide-ranging savings package finalized by the Cabinet includes cuts in payments to new parents, more taxation on the nuclear power industry, shedding 10,000 government jobs over four years, and delaying the building of a replica of a Prussian palace in the heart of Berlin.
While Germany's finances are in a better state than those of many others in the 16-nation eurozone, its budget deficit is still above the maximum allowed by European Union rules and it has been particularly keen to preach the virtues of solid budgets.
"Germany, as the biggest (European) economy, has the outstanding task of setting a good example," Merkel said at a news conference after her Cabinet thrashed out the package at a two-day meeting.
"I must say that the last few hours were a singular show of strength -- about euro80 billion needs to be saved though 2014 so that our financial future can once again stand solidly," she added.
"The last few months have shown -- in connection with Greece and other euro states -- what outstanding significance solid finances have, that they are the precondition for being able to live in stability and prosperity," Merkel said.
Germany had a budget deficit of 3.1 percent of gross domestic product last year. It is expected to exceed 5 percent this year, well above the European Union's 3 percent threshold, and Berlin says it aims to comply with the rules again by 2013.
In addition, even before the eurozone debt crisis the government had anchored a so-called "debt brake" in the constitution that forces it to cut back borrowing over the coming years.
Merkel's center-right coalition came to power last October pledging tax relief, but recently shelved tax cuts for at least the next two years.
In drawing up its package to tackle the deficit, it steered clear of cutting education spending or increasing income tax.
Planned overall spending in this year's budget is euro319.5 billion.
