German Government to Keep Budget Balanced Through 2019

        By Andrea Thomas
        BERLIN--Germany's government maintains its balanced budget goal through to 2019 and will fund planned spending increases over the coming years with higher tax revenue, according to the finance ministry's 2016 revised draft budget seen Friday.
        The cabinet is scheduled on Wednesday to approve the blueprint, in which the government aims to post its third balanced budget in a row next year.
        The new spending plan updates a previous draft budget from March and takes into account better-than-expected economic growth, low unemployment and higher tax revenue.
        The government plans to use any surplus to increase investment instead of repaying debt. It also plans to raise child benefits and cut income taxes by addressing the issue of bracket creep, whereby workers whose pay barely tracks the rate of inflation can slip into higher tax brackets and end up worse off.
        "We stick to what we have called a growth-friendly fiscal consolidation policy," said a senior government official during a briefing on the budget.
        The draft 2016 budget, which will be outlined by Finance Minister Wolfgang Schauble to the press on Wednesday, foresees 312.0 billion euros ($349.5 billion) of spending after this year's planned EUR301.6 billion.
        Overall expenditure will rise to EUR318.8 billion in 2017, EUR326.3 billion in 2018 and EUR333.1 billion in 2019. The government plans to keep its budget balanced throughout the forecast period.
        Total federal investments are forecast to reach EUR30.4 billion in 2016, EUR0.5 billion less than previously planned, but up from EUR30.1 billion this year. The level will rise to EUR31.2 billion in 2017, EUR31.8 billion in 2018 and EUR30.5 billion in 2019.
        The budget plans are based on assumptions that the German economy will grow 1.8% next year after 1.8% growth this year.
        It aims to get Germany's overall debt to below 60% of gross domestic product by the end of this decade, with the rate to fall to under 70% next year.
        Write to Andrea Thomas at andrea.thomas@wsj.com
        (END) Dow Jones Newswires

        June 26, 2015 13:00 ET (17:00 GMT)

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