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Finance Ministry Projects Larger Budget Gap in 2018

German Finance Minister Schaeuble attends a meeting at the lower house of parliament Bundestag on 2017 budget in Berlin
Finance Minister Wolfgang Schäuble, picture source: Reuters

A gap in the federal budget is projected to widen by billions of euros in 2018 despite years of historic surpluses, the deputy finance minister, Jens Spahn, told Handelsblatt.

“The current gap is growing by the billions due to recent compromises made by the coalition government which have led to increased spending and lower revenue,” Mr. Spahn said.

The government faces a future budget gap despite a surplus of €6.2 billion in 2016. Mr. Spahn and Finance Minister Wolfgang Schäuble want to use the unexpected 2016 surplus to pay down public debt.

“When we finally start servicing our debt we will create leeway for ourselves in difficult economic times,” Mr. Spahn said.

The center-left Social Democrats, however, want to use the surplus to make investments in infrastructure, particularly the expansion of broadband Internet access. Economists have also called for increased spending on infrastructure.

“Net investment has been negative for years, which means the state is letting infrastructure decay,” said Peter Bofinger, a member of the German Council of Economic Experts that advises the government.

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