General information and figures
An austerity package of €10bn was approved on the 27th of October 2010. The plan of the German government is to have a fiscal retrenchment of €80bn by 2014 broken down as follows €11.2bn in 2011, €18.6bn in 2012, €23.6bn in 2013 and €26.5bn in 2014. The aim is to have a deficit of 0.35% of nominal GDP and to keep the debt below 20% of GDP.
Unemployment rate (June 2010): 6.9%
GDP (bn euro – 2010): 2432.38
General Government Debt (2009 - % GDP): 73.4
Public deficit (2009 - % GDP): 3.0
Between 10,000 and 15,000 jobs are expected to be cut by 2014. Federal civil servants had to accept substantial wage cuts in the period 2004-2007: one of the measures was to drastically reduce the year-end bonus. This measure was due to expire at the end of 2010, with the cut being removed from 2011 onwards. This has now been stopped, meaning that wages de facto drop by 2.5%.
Cuts in social benefits
Between 2010 and 2014 €20.5bn is to be cut from the budget for proactive labour market policy. Total payments to long-term unemployed are being cut by €0.6bn per year. The long-term unemployed will see their parental leave allowance (€300 per month) scrapped. Heating subsidies for those receiving housing allowance (Wohngeld) are set to be abolished. Under the pretext of strengthening its autonomy, the Federal Labour Agency – the agency responsible for paying unemployment benefits – is expected to finance itself in the middle and long-term without any loan or subsidy from the federal government. That means that the unemployment agency is being left on its own to cope with the consequences of the financial and economic crisis. The government has agreed to raise health insurance premiums. The wealthy will no longer receive the family allowance, if their incomes exceed €250,000 for singles and €500,000 for married couples.
The federal government’s subsidy to the national pension fund for recipients of the long-term unemployment allowance “ALG II” is scrapped. Proposal to increase pension age to 67.
Cuts in public services, transfers and public investments
Transfers to local authorities are cut by €15bn.
The package also included a tax that will add between €8 and €45 to tickets on flights departing from German airports. No financial transaction tax, initially foreseen, has been included in the package. Sharp increase in the tobacco tax.
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