Chancellor Merkel’s cabinet on Wednesday approved a draft budget plan which calls for 310 billion euros of new debt in the next four years. In 2010, Berlin is expected to set a post-war record for deficit spending.

In the early years of Chancellor Angela Merkel’s term in office, her finance minister, Peer Steinbrück, made a name for himself as being tight-fisted, debt averse and committed to balancing Germany’s budget. That, though, was before the financial crisis hit.

Now, Steinbrück is struggling to find ways to pay for Berlin’s suddenly profligate spending as it tries to buy its way out of the crisis.

On Wednesday, Merkel’s cabinet adopted a plan presented by Steinbrück which provides the framework for the next four years of German fiscal planning. In total, it calls for €310 billion ($436 billion) in fresh debt from 2010 to 2013, including a whopping €86.1 billion ($121.2 billion) for 2010, far and away the largest single-year budgetary hole in the history of post-war Germany.

The 2010 total could even top €100 billion depending on the development of expenses related to Germany’s economic stimulus packages (worth a total of €82 billion) and its bank bailout fund (worth €500 billion). Germany’s previous record for fresh debt in a single fiscal year was the €40 billion borrowed in 1996. Steinbrück’s new plan calls for new debt to begin falling after 2010, with €71.1 billion necessary in 2011, €58.7 billion in 2012 and €45.9 billion in 2013.

Source/Full Story: SPIEGEL ONLINE

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